Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. The fund returned -0.28% net in the fourth quarter compared to a 2.20% return for the Russell 1000 Growth Index and a 7.41% return for the S&P 500 Index. In 2022, the fund returned -38.02% net compared to -29.14% and -18.22% returns for the Russell and the S&P 500 Indexes, respectively. Inflation, the Fed’s interest rate hikes, and revenue and earnings slowdowns of the fund’s holding companies led the fund to underperform in the quarter and the year. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Polen Capital highlighted stocks like Amazon.com, Inc. (NASDAQ:AMZN) in the fourth quarter investor letter. Headquartered in Seattle, Washington, Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products and subscriptions. On January 18, 2023, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $95.46 per share. One-month return of Amazon.com, Inc. (NASDAQ:AMZN) was 13.93%, and its shares lost 37.06% of their value over the last 52 weeks. Amazon.com, Inc. (NASDAQ:AMZN) has a market capitalization of $973.854 billion.
Polen Capital made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2022 investor letter:
“If you look at a company like Amazon.com, Inc. (NASDAQ:AMZN) (the largest weighting in the Portfolio), we expect the company to generate accelerating earnings growth through the year as revenue growth accelerates from the challenging 2022 period and as the company makes more progress on its ongoing cost-cutting initiatives. Over a longer period, Amazon’s operating margins should continue to expand even further as a positive mix shift that has already been taking place, continues. The fastest growing parts of Amazon; Amazon Web Services (AWS), Fulfillment by Amazon, Advertising, and Prime subscription revenues, are much higher margin than the core e-commerce business
Amazon and PayPal were similar, in our view, in that both companies were “COVID beneficiaries” as their businesses accelerated in 2020 and 2021 and are now growing much slower on those tougher comparisons. Many, including us, were hopeful that growth would begin to reaccelerate in 4Q’22 (there were signs of this in 3Q’22), but both companies gave cautious guidance for the holiday quarter as consumer spending came under pressure. That said, we see both companies growing earnings above normal in 2023, even if a recession occurs. According to our research, both companies should see a return to more normal revenue growth as comparisons ease and both companies also undergo significant cost reduction plans, which should allow for strong incremental profit margins. Amazon, in particular, should see a very sharp rebound in margins.”
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Amazon.com, Inc. (NASDAQ:AMZN) is in 2nd position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 269 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the third quarter, which was 252 in the previous quarter.
We discussed Amazon.com, Inc. (NASDAQ:AMZN) in another article and shared Miller Value Partners’ views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
