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Is Align Technology (ALGN) a Good Investment Pick?

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Polen Capital, an investment management firm, published its “Polen Global Growth Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. During the first quarter of 2022, the Polen Global Growth Composite Portfolio (the “Portfolio) was down -13.30% and -13.54%, gross and net of fees, versus a decline of -5.35% for the MSCI ACWI (the “Index”).  Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022. 

In its Q1 2022 investor letter, Polen Global Growth Fund mentioned Align Technology, Inc. (NASDAQ:ALGN) and explained its insights for the company. Founded in 1997, Align Technology, Inc. (NASDAQ:ALGN) is a San Jose, California-based orthodontics company with a $21.5 billion market capitalization. Align Technology, Inc. (NASDAQ:ALGN) delivered a -58.38% return since the beginning of the year, while its 12-month returns are down by -53.29%. The stock closed at $273.51 per share on June 07, 2022.

Here is what Polen Global Growth Fund has to say about Align Technology, Inc. (NASDAQ:ALGN) in its Q1 2022 investor letter:

"Align Technology continues to de-risk as it grows and is exhibiting increasing returns to scale. The business prints over 800,000 unique clear aligners per day, and competitors are realizing how difficult it is to compete with this globally scaled, well-led company that enjoys the leading brand and product in the market. We applaud management’s stewardship of the business thus far and believe there is a very long period of compounding ahead of it. Despite robust fundamentals, the company was swept up in the sell-off that occurred during the quarter, and we took advantage of the favorable valuation by raising it to an average position size within the portfolio.

With respect to Align, share price performance seemed to be related to a deceleration in case shipments, which was mostly due to the Omicron variant and a tough year-over-year comparison to a 37% growth rate. That said, Align’s systems and services segment revenues grew 61% this past quarter on top of 25% growth during the same period in 2021 and half of the scanner sales were to new offices, which has historically been a great leading indicator for increased clear aligner sales. CEO Joe Hogan has been frequently asked whether the deceleration was due to his company pulling forward demand during the pandemic. Each time he has replied that the deceleration was due to the Omicron variant causing practice closures and staff shortages."

Kalcutta/Shutterstock.com

Our calculations show that Align Technology, Inc. (NASDAQ:ALGN) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Align Technology, Inc. (NASDAQ:ALGN) was in 45 hedge fund portfolios at the end of the first quarter of 2022, compared to 51 funds in the previous quarter. Align Technology, Inc. (NASDAQ:ALGN) delivered a -38.13% return in the past 3 months.

In March 2022, we also shared another hedge fund’s views on Align Technology, Inc. (NASDAQ:ALGN) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.