Alkeon Capital’s 114 Stock Portfolio List

Up to date on June twenty seventh, 2022 by Nikolaos Sismanis

Alkeon Capital Administration is a privately-owned registered funding adviser out of New York. The corporate was shaped in 2002 as a spin-off from CIBC Oppenheimer.

Two key people govern the agency: Takis Sparaggis, President and CIO, and Alex Tahsili, who performs the Managing Director function.

They each oversee Alkeon Capital Administration’s portfolio, at present valued at roughly $49.9 billion, of which round $24.3 billion is allotted in public equities.

Traders following the corporate’s 13F filings over the past 3 years (from mid-Could 2019 by means of mid-Could 2022) would have generated annualized complete returns of 4.8%. For comparability, the S&P 500 ETF (SPY) generated annualized complete returns of 16.1% over the identical time interval.

Word: 13F submitting efficiency is completely different than fund efficiency. See how we calculate 13F submitting efficiency right here.

You’ll be able to obtain an Excel spreadsheet with metrics that matter of Alkeon Capital Administration’s present 13F fairness holdings under:

Preserve studying this text to be taught extra about Alkeon Capital Administration.

Desk Of Contents

Alkeon’s Method To Investing

Alkeon has stayed away from the highlight for many years, publishing restricted data relating to its operations and funding philosophy. An interview with administration from its early days, nevertheless, reveals important data which appears to carry up within the current day.

Its analysis course of is a 100% bottom-up, fundamentally-driven, research-concentrated process to investing. Their flagship technique includes figuring out important potential returns in Know-how, Media, Telecom (“TMT”) within the broadest of scope. Making use of a bottom-up technique implies that Alkeon focuses on particular person securities moderately than on the general actions within the securities market.

Mr. Sparaggis, who holds the ultimate phrase for any funding, goals for a 12 to 24-month time horizon for Alkeon’s holdings and discourages short-term buying and selling. Alkeon avoids timing the path of the market and goals to generate alpha based mostly on its distinctive stock-picking abilities. It additionally has an elaborate community of business contacts, with whom it’s in steady talks with a view to determine business tendencies earlier than they turn out to be obvious to Wall Avenue.

Alkeon is primarily centered on investing in shares with spectacular development charges. Many buyers hesitate to put money into this kind of inventory as a consequence of their extreme price-to-earnings ratios however Alkeon has proved competent in figuring out high-growth shares that produce outsized returns. Notably, the typical price-to-earnings ratio of the inventory portfolio of Alkeon at present stands at 57.43.

When it comes to danger administration, the corporate’s in-house danger supervisor is liable for periodic checks to make sure diversification amongst particular person securities and sectors, liquidity, and total fund exposures.

Lastly, Alkeon manages its shoppers on a pari passu foundation. In different phrases, shoppers are handled in an equal-footing method, managed with out desire. By comparability, some hedge funds might differentiate amongst a number of lessons of shoppers, based mostly on their obtainable capital and repute.

Alkeon’s Portfolio & Prime Holdings

Round 1/3 of Alkeon’s portfolio consists of public equities, whereas the remainder embodies a number of choices, as hedge funds typically do to alleviate their danger profile. The picks replicate administration’s tech and shopper discretionary-oriented technique. These two sectors occupy round 62% of Alkeon’s portfolio collectively.

Supply: 13F filings, Writer

Out of Alkeon’s 114 particular person shares, the highest 10 holdings account for round 31.2% of its public-equities a part of the portfolio. That determine reaches about 48.5% in relation to its 20 bigger picks, which signifies a comparatively concentrated allocation of funds.

Nonetheless, no holding accounts for greater than 5.6% of the overall portfolio, which is kind of distinctive among the many varied funds we have now lined. That being mentioned, the fund’s sector diversification could also be a bit weak as a result of nearly unique focus of Alkeon on tech and shopper discretionary shares.

Throughout the interval protecting Alkeon’s newest 13F submitting, the fund initiated and offered the next noteworthy securities:

New Buys:

• Tesla Inc (TSLA)
• Workday Inc (WDAY)
• Adobe Techniques, Inc. (ADBE)
• American Categorical Co (AXP)
• DocuSign Inc (DOCU)
• Salesforce.com Inc. (CRM)

New Sells:

• Costco Co. (COST)
• ANSYS, Inc. (ANSS)
• Aspen Know-how Inc (AZPN)
• Journey.com Group Ltd (TCOM)
• TAL Training Group American Depositary ADR (TAL)

As of the fund’s newest 13F submitting, the next are the highest 10 holdings of Alkeon:

Supply: 13F filings, Writer

Meta Platforms, Inc. (META)

Meta Platforms has had a spot in Alkeon’s portfolio since Q3-2014 and is now the fund’s largest holding.

Meta is an incredible money cow, however with an issue. With robust financials, a wholesome steadiness sheet, and the perfect social media platform for advertisers, Meta has been dominating the social media business. The corporate reported an all-time excessive backside line of $19.37 billion in FY2021, amid nice person development, however now decelerating to the one digits.

For these causes, it will not be an entire shock if Meta paid a dividend sooner or later sooner or later.

Alternatively, the inventory has failed to draw the next a number of, because the steep scrutiny it has confronted over the previous few years have had an affect on the valuation. Hypothesis over the corporate’s large spending towards “The Metaverse” has additionally spurred uncertainty. The inventory is just buying and selling at round 16.0 instances its underlying earnings, regardless of its constant profitability and future development prospects.

With its ARPU (common income per person) nonetheless very robust, Meta’s financials are greater than prone to proceed increasing quickly. Meta’s funding case immediately doesn’t solely embody the potential for a big upside but additionally comes with an important margin of security.

If such a valuation growth by no means seems, and Meta continues to commerce at a ahead P/E of round 16.0, at an EPS development charge of 10%-15% within the medium time period (which the present person and APRU development trajectory and ongoing inventory repurchases might moderately maintain), buyers ought to obtain equally passable returns with a continuing valuation a number of.

Meta Platforms inventory at present accounts for five.6% of the fund’s complete holdings.

Alphabet (GOOGL)(GOOG)

Alphabet affords a number of well-known merchandise, akin to Google, Android, Chrome, Google Cloud, Google Maps, Google Play, YouTube, in addition to technical infrastructure. Whereas the corporate’s growth has lasted for greater than a decade and a half, it’s nonetheless a high-growth inventory.

Income development has re-accelerated, with the corporate posting development of over 41% final 12 months, regardless of the deceleration precipitated throughout the first couple of quarters throughout the preliminary pandemic outbreak. The corporate is likely one of the most attractively priced shares within the sector as properly, buying and selling at round 19.1 instances its ahead earnings, regardless of its constant development, huge moat, and robust steadiness sheet.

With its strong profitability, Alphabet has accrued a money and equivalents place of $133.9 billion. Because of this, the corporate can comfortably afford to put money into its long-term bets akin to Waymo, and within the meantime return money to its shareholders by means of buybacks. Alphabet has repurchased $52.18 billion price of inventory over the previous 4 quarters, retiring shares at an all-time excessive charge.

Alkeon trimmed its place by 13% throughout the quarter. The inventory accounts for round 5.1% of its portfolio and is the fund’s second-largest holding.

QUALCOMM Integrated (QCOM)

QUALCOMM is a comparatively new place in Alkeon’s portfolio. The fund initiated a place in This autumn 2021, but QUALCOMM rapidly ascended amongst the fund’s high holdings.

“High quality Communications” was began in the lounge of Dr. Irwin Jacobs in 1985. The corporate’s first product and repair was a satellite tv for pc utilized by long-haul trucking corporations that would find and message drivers. Qualcomm, as it’s identified immediately, develops and sells built-in circuits to be used in voice and knowledge communications. The chip maker receives royalty funds for its patents utilized in gadgets which are on 4G and 5G networks.

The corporate has grown earnings-per-share at a charge of 6.6% per 12 months over the past decade. Its agreements with Apple and Huawei, a declining share rely, and management in 5G ought to enable the corporate to develop within the coming years. We additionally imagine that demand for 3G/4G/5G headsets will improve following a restoration from the COVID-19 pandemic.

QUALCOMM additionally numbers 20 years of consecutive annual dividend will increase, that includes a 5-year dividend-per-share CAGR of 5.11%.

QUALCOMM is Alkeon’s third-largest holding, making up 4.0% of its portfolio. The fund boosted its place by 10.2% in comparison with the earlier quarter.

Synopsys develops digital design automation software program merchandise used to compose and take a look at built-in circuits. Each the corporate’s high & backside strains have expanded quickly over the previous few years, as Synopsys benefited tremendously from the rising international demand for chips.

Analysts are at present anticipating annualized earnings development within the double-digits over the medium time period. Nonetheless, buying and selling at a ahead P/E of over 37.6 whereas nonetheless not paying a dividend, present buyers face a really skinny margin of security.

The place was trimmed by 9% throughout Alkeon’s newest quarter. It’s the fund’s fourth-largest place.

Cadence Design Techniques, Inc. (CDNS)

Cadence Design Techniques affords software program, {hardware}, companies, and reusable built-in circuit design blocks internationally. The corporate’s useful verification companies, comprising of emulation and prototyping {hardware}, enable its shoppers to carry out chip verification.

The corporate’s revenues and internet revenue have been increasing at a really constant and speedy tempo over the previous decade. A dividend has but to be initiated, nonetheless.

Cadence has had a spot in Alkeon’s portfolio since late 2014. The fund trimmed its place by 2% throughout the quarter, however nonetheless owns round 1.51% of the corporate’s excellent shares. It’s now the fund’s fourth-largest holding.

Microsoft (MSFT):

Discovered amongst the highest holdings of the vast majority of the funds we have now lined, Microsoft is Alkeon’s sixth-largest holding, occupying 2.5% of its portfolio. The fund trimmed its place by 22% throughout the quarter.

Microsoft is a mega-cap inventory with a market capitalization of $1.85 trillion.

Supported by the corporate’s robust profitability, administration has been persistently elevating buybacks over the previous decade to additional reward its shareholders. The quantity allotted to inventory repurchases has reached new all-time highs over the previous 4 quarters, at practically $31.1 billion.

Income development stays within the double-digits, so it’s prone to see capital returns accelerating transferring ahead. The corporate can be rising the dividend at a double-digit charge, although on the present yield, which stands under 1%, buyers ought to count on the vast majority of their future returns within the type of capital good points.

Regardless of that, Microsoft’s money place has been rising frequently, with the corporate at present sitting on high of a large $104.6 billion money pile.

Additional, whereas many corporations had chosen to make the most of the ultra-low rate of interest surroundings over the previous a number of years to boost low-cost debt and purchase again inventory, Microsoft’s remained prudent and considerate. Not solely are present earnings extensively protecting buybacks (~60% buyback “payout ratio”), however long-term debt has been considerably lowered from $76 billion in mid-2017 to round $48.1 billion as of its final report.

It’s spectacular {that a} inventory with a market capitalization of $1.85 trillion nonetheless has such a robust development momentum. Shares are additionally buying and selling at a ahead P/E ratio of round 23.3, which might sign a chance towards the corporate’s robust development velocity, particularly from Azure. On account of Microsoft’s strong development and financials, it’s seemingly that buyers received’t let shares commerce at a lot of a reduction going ahead, regardless of the underlying shaky macroeconomic surroundings.

KLA Company (KLAC)

KLA Company is a provider to the semiconductor business. The corporate provides course of management and yield administration programs for semiconductor producers akin to TSMC, Samsung, and Micron. KLA was created in 1997, by means of a merger between KLA Devices and Tencor Devices, and has grown by means of a variety of acquisitions since then.

KLA Company’s earnings-per-share development has traditionally come from a mixture of income development, margin enhancements, and share repurchases. The income development outlook stays robust, as KLA has been in a position to develop its gross sales significantly over the last couple of quarters. Nearly all of KLA’s revenues come from product gross sales, however service revenues have gotten more and more necessary. It is a constructive in the long term, as the next charge of recurring service revenues ought to assist KLA’s high line turn out to be much less cyclical.

The corporate has additionally grown its dividend per share for 12 consecutive years now, that includes a 5-year DPS CAGR of 14.22%.

KLA has had a spot in Alkeon’s portfolio since Q2-2017. The fund trimmed its place within the firm by 4% throughout the earlier quarter. KLA is now Alkoen’s seventh-largest place, comprising 2.4% of its portfolio.

Taiwan Semiconductor Manufacturing Firm Restricted (TSM):

Taiwan Semiconductor Manufacturing is the world’s largest devoted foundry for semiconductor elements. The corporate is headquartered in Hsinchu, Taiwan. American buyers can provoke an possession stake in Taiwan Semiconductor by means of American Depository Receipts on the New York Inventory Trade, the place they commerce below the ticker TSM with a market capitalization of US$440.7 billion.

Because the chief within the semiconductor manufacturing business, it’s unsurprising that Taiwan Semiconductor has generated great development over the past decade. Certainly, the corporate has compounded its adjusted earnings-per-share by 16.0% per 12 months over this time interval. The corporate reveals a remarkably robust steadiness sheet as properly. Since only a few corporations are debt-free, the distinctive steadiness sheet of the semiconductor producer is a testomony to the power of its enterprise mannequin, which doesn’t require debt to gasoline development and generates ample free money flows.

Taiwan Semiconductor is Alkeon’s eighth-largest holding. The place was left comparatively unchanged in comparison with the earlier quarter.

Lam Analysis Corp. (LRCX)

Lam Analysis Company was based in 1980 and headquartered in Fermont, California. The corporate designs, manufactures, markets, refurbishes, and companies semiconductor processing gear used to manufacture built-in circuits worldwide. Lam is a serious provider of wafer fabrication gear and companies to the semiconductor business.

Lam Analysis has grown its income by a powerful 20.12% development charge over the previous ten years and 18.33% over the previous 5 years. Earnings per share have elevated by over 32.4% over the previous 5 years.

The corporate has additionally had a pleasant dividend development file over the previous three years, with a median of 10.9%. The corporate’s most up-to-date dividend improve was 15.4%, introduced on August 26, 2021.

Alkeon elevated its place within the inventory by 19% over the last quarter. The inventory now accounts for two.0% of Alkeon’s holdings and is the fund’s ninth-largest place.

Visa (V)

Visa is the world’s chief in digital funds, with exercise in additional than 200 nations. The inventory went public in 2008, and its IPO has confirmed to be some of the profitable in U.S. historical past. The corporate’s international processing community gives safe and dependable funds around the globe and is able to dealing with greater than 65,000 transactions a second. Within the fiscal 12 months 2021, the corporate generated practically $12.3 billion in revenue.

On April twenty sixth, 2022, Visa reported Q2 fiscal 12 months 2022 outcomes for the interval ending March thirty first, 2022. (Visa’s fiscal 12 months ends September thirtieth.) For the quarter, Visa generated income of $7.2 billion, adjusted internet revenue of $3.8 billion, and adjusted earnings-per-share of $1.79, marking will increase of 25%, 27%, and 30%, respectively.

These outcomes had been pushed by a 17% acquire in Funds Quantity, a 47% acquire in Cross-Border Quantity, and a 19% acquire in Processed Transactions. Because of financial sanctions imposed on Russia by the U.S., European Union, United Kingdom, and others, Visa introduced in March 2022 that they had been suspending operations in Russia and since they’re not producing income from actions associated to Russia. Russia accounted for roughly 4% of complete internet revenues for the primary half of fiscal 2022 and the total 12 months of fiscal 2021.

Throughout the quarter, Visa returned $3.7 billion to shareholders by way of dividends and share repurchases.

Visa is Alkeon’s tenth-largest place. The fund boosted its place by 54% throughout the newest quarter, leading to Visa accounting for 1.9% of its complete holdings.

Ultimate Ideas

Regardless of Alkeon’s low profile and desire to not entice media consideration, the corporate is a silent achiever. Its efficiency has lagged recently on account of the continuing sell-off that has primarily occurred in expertise and development equities. Nonetheless, up to now Alkeon has delivered market-beating efficiency by unlocking the alpha potential on a number of shares, offering its shoppers with glorious funding returns.

You’ll be able to obtain an Excel spreadsheet with metrics that matter of Alkeon Capital Administration present 13F fairness holdings under:

Extra Sources

See the articles under for evaluation on different main funding companies/asset managers:

In case you are concerned with discovering extra high-quality dividend development shares appropriate for long-term funding, the next Positive Dividend databases can be helpful:

The main home inventory market indices are one other stable useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month: