We recently Billionaire Israel Englander's Top 10 Stocks for 2024. Alphabet Inc. (NASDAQ:GOOG) ranks eighth on the list, so it's worth taking a closer look.
Billionaire Israel Englander is one of America's most prominent hedge fund managers. He founded Millennium Management in 1989. Today, the fund's portfolio is worth more than $234 billion. Englander earned the top spot on Bloomberg's list of highest-paid hedge fund managers in 2023 with a staggering $2.8 billion in net income, including profits from personal investments and fees. Earlier this year, Bloomberg reported that Izzy Englander's Millennium Management made $600 million from commodity investments last year. However, in a separate report, the paper said that despite appointing a new commodity head and making major overhauls, Millennium's commodity business is lagging behind Citadel (billionaire Ken Griffin's), which made $8 billion in commodity profits in 2022. One reason Millennium has struggled to make big profits is that billionaire Englander has imposed “tough guardrails” to limit losses, experts say. To make money in the commodities business, you have to take risks and give traders some freedom, but Englander likes to be in control. The Financial Times reported earlier this year that Millennium Management manages $60 billion in assets, employs 5,400 people and has 17 offices. But Englander owns 100% of the company.
The report quoted a person who works at the fund as saying such a large concentration was “not a good idea.”
As reported by the FT, Englander's fund is up 8.3% by October 2023, with returns of 12.5% in 2022, 13.6% in 2021 and an astounding 25.9% in 2020.
For this article, we looked at Millennium Management's first quarter portfolio and selected the fund's top 10 stocks. Why do we care about the stocks hedge funds concentrate their investments in? The reason is simple: our research shows that you can outperform the market by mimicking the top holdings of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points. (Click here for details).
Israel Englander of Millennium Management
Alphabet Inc. (NASDAQ:GOOG)
Billionaire Israel Englander's stock value: $820,337,453
Alphabet Inc. (NASDAQ:GOOG) seems to be fighting a relentless battle with its competitors in the AI race. According to many, the AI race is threatening Google's vital search business. However, many analysts believe that Alphabet Inc. (NASDAQ:GOOG) has made a big turnaround and will continue to grow. Speaking to CNBC last month, Big Technology founder Alex Kantrowitz said Alphabet Inc. (NASDAQ:GOOG) is doing “very well” thanks to growing revenue, management's tough stance on “troublemakers” within the company, dividends, and share buybacks.
Across all devices, Alphabet Inc.'s (NASDAQ:GOOG) Market-In searches increased 0.5 percentage points month-over-month in May, according to the latest data analyzed by Bank of America. Bank of America analyst Justin Post said this indicates that Alphabet Inc.'s (NASDAQ:GOOG) AI overview is “driving search growth and usage.”
Analysts also believe that Alphabet Inc. (NASDAQ:GOOG) is in a strong position to offset Google search headwinds and market share losses with YouTube. YouTube's ad revenue reached $8.1 billion in the first quarter, growing 21%. Alphabet Inc. (NASDAQ:GOOG) posted net income of $23.66 billion for the quarter, up 57%, to $1.89 per share.
Alphabet Inc. (NASDAQ:GOOG) bulls believe the market hasn't priced in growth in the company's cloud, other businesses, video, and other high-growth initiatives. The company's stock is trading at 20 times Alphabet's 2025 EPS forecast of $8.57. This multiple makes the company's stock attractive, as Wall Street expects Alphabet Inc. (NASDAQ:GOOG) earnings to grow 13.40% in 2025 and 19% annually over the past five years.
In its April 2024 investor letter, Lakehouse Global Growth Fund said the following about Alphabet Inc. (NASDAQ:GOOG):
“Alphabet Inc.” (NASDAQ:GOOG) reported strong quarterly results that beat analysts' expectations by a wide margin. Revenue grew 15.4% (16.0% excluding the impact of currency) to $80.5 billion, and operating income increased 46.0% to $25.5 billion. Accelerating revenue growth across Search, YouTube Ads, and Google Cloud helped the company achieve its highest operating margin since 2021, signaling meaningful progress on the company's efforts to permanently reinvent its cost structure. On the generative AI front, management highlighted the company's infrastructure advantages, including its fifth-generation TPU (a chip developed by Google specifically for AI training and inference), high-performance data center architecture, and AI models that are 100 times more efficient than 18 months ago. Overall, we believe Alphabet is well-positioned for future AI opportunities and still has significant potential earnings power. Combine that with a relatively undemanding valuation of 21 times forward net earnings and over $100 billion in cash on the balance sheet, and it's easy to see why we remain optimistic about a range of outcomes over the next few years.”
Overall, Alphabet Inc. (NASDAQ:GOOG) ranks #8 on Insider Monkey's list of billionaire Israel Englander's top 10 stocks for 2024. Billionaire Israel Englander's Top 10 Stocks for 2024 To see other stocks on the list, click here. While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOG), we believe AI stocks have the potential to deliver higher returns in a shorter time frame. If you're looking for AI stocks that are more promising than Alphabet Inc. (NASDAQ:GOOG) but trade at less than 5x stock price, check out our report. Cheapest AI Stocks.
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Disclosures: None. This article was originally published on Insider Monkey.
