Is Alphabet (GOOG) Trading at an Attractive Valuation?
Pershing Square Holdings, an investment holding company, released its fourth quarter 2023 investor letter. A copy of the same can be downloaded here. During the year, the fund generated a NAV performance of 26.7% versus 26.3% for the principal benchmark the S&P 500 index. In 2023, the portfolio companies performed exceptionally well, significantly increasing their stock prices. Portfolio companies sustained growth in revenue, profitability, and shareholder value despite two conflicts and a prolonged increase in interest rates. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Pershing Square Holdings featured stocks like Alphabet Inc. (NASDAQ:GOOG) in the Q4 2023 investor letter. Headquartered in Mountain View, California, Alphabet Inc. (NASDAQ:GOOG) is a multinational technology company. On March 26, 2024, Alphabet Inc. (NASDAQ:GOOG) stock closed at $151.70 per share. One-month return of Alphabet Inc. (NASDAQ:GOOG) was 10.38%, and its shares gained 48.87% of their value over the last 52 weeks. Alphabet Inc. (NASDAQ:GOOG) has a market capitalization of $1.878 trillion.
Pershing Square Holdings stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its fourth quarter 2023 investor letter:
"In early 2023, we initiated an investment in Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, at a highly attractive valuation during a period when apprehension about the company's competitive positioning in AI overshadowed the high-quality nature of its business and strong growth prospects.
Since we initiated our position, the company has delivered impressive operating results. With two of the highest ROI and most resilient ad formats in Search and YouTube, Google occupies a dominant position in the secularly fast-growing digital advertising market. As the digital advertising market recovered over the course of the year, revenue growth in Google's advertising business accelerated from 3% in Q1 2023 to 10% in Q4 2023. Moreover, the company realized significant progress on its substantial margin expansion opportunity and maintained a robust capital return program. In 2023, operating profit margins expanded by approximately 225 basis points (bps), excluding one-time severance and real estate charges, as the Cloud segment reached breakeven profitability. We expect continued cost control, automation efficiencies, and operating leverage in under-earning segments (Cloud & YouTube) to sustain margin expansion as Google invests behind AI initiatives.
The company is using its ample free cash flow to repurchase approximately 4% of its outstanding shares on an annual basis…” (Click here to read the full text)
A laptop and phone open to Google's services in an everyday setting.
Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Alphabet Inc. (NASDAQ:GOOG) was held by 166 hedge fund portfolios, compared to 163 in the previous quarter, according to our database.
We discussed Alphabet Inc. (NASDAQ:GOOG) in another article and shared Michael Burry’s top stock picks for 2024. In addition, please check out our hedge fund investor letters Q4 2023 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.
