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Here’s Why Wedgewood Thinks Alphabet Inc. (GOOG) is “Attractive to Investors of All Stripes”

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Jose Karlo Mari Tottoc
·3 min read
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Wedgewood Partners, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. A return of +4.8% was reported by the fund for the Q1 of 2021, outperforming its Russell 1000 Growth benchmark that delivered a 1% return, but below both the S&P 500 and Russell 1000 Value Index that had a 6.2% and 11.3% gains in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Wedgewood Partners, in their Q1 2021 investor letter, mentioned Alphabet Inc. (NASDAQ: GOOG) and shared their insights on the company. Alphabet Inc. is a Menlo Park, California-based technology company and internet-related services provider, that currently has a $1.5 trillion market capitalization. Since the beginning of the year, GOOG delivered a 29.33% return, extending its 12-month gains to 79.47%. As of April 13, 2021, the stock closed at $2,267.27 per share.

Here is what Wedgewood Partners has to say about Alphabet Inc. in their Q1 2021 investor letter:

"Alphabet’s core Google advertising business continued to reaccelerate, growing +22% during the December quarter. This rate of growth is faster than the pre-pandemic growth rates as digital advertising adoption has turned into a critical customer acquisition lifeline for businesses of all sizes in regions around the world. While this growth is hardly unprecedented at Alphabet, we are encouraged by the emerging operating leverage that the company has exhibited over the past few quarters. As our largest portfolio holding, we continue to expect Alphabet to significantly “under-earn” relative to its potential, often running expenses significantly higher than top-line growth, sometimes to sustain noncore, money-losing projects in its “Other Bets” segment, but also to invest in long-term opportunities such as cloud infrastructure as a service and streaming services (YouTube TV). Despite being a well-known holding in many growth portfolios, we think there is quite a bit of pent-up value in the core Google business that makes this attractive to investors of all stripes."

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Our calculations show that Alphabet Inc. (NASDAQ: GOOG) ranks 6th in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Alphabet Inc. was in 157 hedge fund portfolios, compared to 150 funds in the third quarter. GOOG delivered a 29.15% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. 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.