Polen Capital, an investment management firm based in Boca Raton, Florida, recently released its investor letter for the third quarter of 2023. The letter provides insights into the performance of the firm’s Global Growth Composite Portfolio and analysis of top holdings, including Alphabet Inc (NASDAQ: GOOG).
Portfolio Performance Closely Tracked Benchmark
Polen Capital’s Global Growth Composite Portfolio returned -3.19% gross and -3.46% net of fees in Q3 2023. This closely tracked the performance of the fund’s benchmark, MSCI ACWI Index, which declined 3.40% over the same period.
Despite the downward trend, Polen Capital remains confident in the long-term growth potential of its top holdings. The Global Growth Composite Portfolio is focused on investing in high-quality companies with durable competitive advantages, strong management teams and the ability to grow intrinsic value over long periods of time.
Review of Top 5 Holdings Provides Investment Insights
The investor letter provides a review of Polen Capital’s top 5 holdings, giving insights into the firm’s primary investments. The holdings mentioned are:
- UnitedHealth Group
Polen Capital states that studying the top holdings helps gain perspective on the fund’s investment philosophy and outlook. The focus remains on steadily compounding intrinsic value over time.
Deep Dive into Top Holding Alphabet
Polen Capital provided a deep dive into Alphabet Inc (NASDAQ: GOOG), the technology conglomerate that operates Google, Android, YouTube and other businesses. Alphabet remains a top holding for the firm.
In Q3 2023, Alphabet generated approximately $75 billion in total revenue, representing 9% growth on a constant currency basis. The company’s core Google Search business maintained dominant market share despite competition.
Polen Capital remains impressed by Alphabet’s ability to reinvest capital into emerging businesses such as YouTube, Google Cloud and Other Bets like Waymo. With over $20 billion in free cash flow last quarter, Alphabet has substantial capital to fund new innovations.
The firm believes Alphabet’s AI expertise positions it strongly versus rivals like Microsoft. Management is aggressively leveraging Google’s historic strength in AI and machine learning. This provides a competitive edge as AI becomes more central in tech.
Alphabet’s Share Price Impact
Alphabet’s share price has shown resilience, returning 46.93% year-to-date through November 3, 2023. The stock trades around $130, giving Alphabet a market capitalization of approximately $1.6 trillion.
Polen Capital sees upside for Alphabet as it maintains leadership in online search while expanding Cloud, AI, and other emerging tech businesses. The firm’s bullish investment case underpins Alphabet’s position as a top holding.
Alphabet’s Popularity Among Hedge Funds
According to our data, Alphabet ranked 7th on the list of most popular stocks among hedge funds. The tech giant was in 152 hedge fund portfolios in Q2 2023, down slightly from 155 in the previous quarter.
This indicates Alphabet remains a core long-term holding for major hedge funds, despite the slight decline in popularity quarter-over-quarter. Hedge funds are still betting on Alphabet’s future growth potential.
In summary, Polen Capital’s Q3 2023 investor letter provides valuable perspective on the firm’s portfolio strategy and bullish outlook on top holding Alphabet. While monitoring near-term volatility, Polen Capital retains conviction in Alphabet’s competitive strengths in search, AI, and emerging tech markets. This long-term investment thesis supports the stock as a continuously attractive hedge fund holding.