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Lookback: Wedgewood Partners 2019 Alphabet Inc (GOOGL) Thesis

Alex Smith
·3 min read

If you are looking for the best ideas for your portfolio you may want to consider some of Wedgewood Partners top stock picks. Wedgewood Partners, an investment management firm, is bullish on Alphabet Inc. (NASDAQ:GOOGL) stock. In its Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Alphabet Inc. (NASDAQ:GOOGL) stock. Alphabet Inc. (NASDAQ:GOOGL) is an American multinational conglomerate headquartered in Mountain View, California.

In October 2019, Wedgewood Partners had released its Q3 2019 investor letter. The investment firm said that Alphabet Inc. (NASDAQ:GOOGL) was one of the biggest contributors to its performance in Q3 2019. The stock has posted a return of 34.2% in the trailing one year period, outperforming the S&P 500 Index which returned 14.4% in the same period. This suggests that the investment firm was right in its decision.

Wedgewood Partners fund posted a return of 0.39% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.87% in the same quarter. Let’s take a look at comments made by Wedgewood Partners about Alphabet Inc. (NASDAQ:GOOGL) in the Q3 2019 investor letter.

"Alphabet also saw revenues accelerate across their key advertising business (Google), in addition to rapid growth in their cloud services business that the Company sized at a $2 billion per quarter revenue run rate. Compute and data analytics drove Google’s cloud acceleration, which we estimate is growing faster than Microsoft’s Azure and Amazon’s AWS offerings. As Google’s advertising business stabilized, and with Google Cloud services now driving a more meaningful portion of revenues, combined with a massive cash balance and undemanding multiple, we added to our Alphabet position to take portfolios about 250 basis points overweight relative to the benchmark."

Alphabet
Alphabet

Last week, we published an article revealing that Alphabet Inc. (NASDAQ:GOOGL) was one of the top 5 stocks New Mets Owner Steve Cohen bought in the third quarter.

In Q2 2020, the number of bullish hedge fund positions on Alphabet Inc. (NASDAQ:GOOGL) stock decreased by about 6% from the previous quarter (see the chart here), so a number of other hedge fund managers don't believe in Alphabet's growth potential. Our calculations showed that Alphabet Inc. (NASDAQ:GOOGL) is ranked #5 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla's stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

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