1/6/2024 0 Comments Horizon distributorsWe expect this favorable competitive dynamic to continue for the foreseeable future. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment.įurther, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. In the meantime, the Company has 4% to 5% of shares authorized for repurchase which is an attractive use of capital as the stock trades for about just 18X 2023 consensus estimates.Īpple grew revenues +9%, driven by +17% growth in the Services segment. We think this business can generate much better margins at some point. However, the stock has outperformed relative to other holdings as core Google Search has been less affected by disruptions related to Apple’s privacy initiatives.Īlphabet’s Cloud segment is generating revenue at a $24 billion run rate but is still running at a loss. Despite this stellar top-line performance, shares sold off as the market began to discount fears of a recession. In our opinion, the shares have discounted away all of PayPal’s pandemic user and revenue gains, so we added to positions during the quarter.Īlphabet grew its core search revenues +24% on a +30% year-ago comparison. PayPal’s user base has grown by +50% since the onset of the pandemic so it makes sense for management to focus on driving higher transactions per account and better monetize this historical windfall of users. Much of this will be driven by further penetration into the Company’s nearly 450 million active users. As the Company laps the headwinds of eBay and difficult year-ago comparisons, we expect PayPal should drive long-term growth in the mid-teens. Revenue grew +8%, but closer to +15% when adjusted for the well-telegraphed roll-off of its eBay relationship. PayPal Holdings detracted from performance despite the Company generating healthy growth. We continue to think the Company’s competitive positioning and attractive valuation makes it a rare asset deserving of a top weighting in the portfolios. Over that time frame, Meta has doubled revenues and maintained returns on invested capital well above +20%. Meta effectively built user product rivals to both TikTok and Snapchat and is quickly scaling them across Meta’s over 3 billion daily users. For example, nearly half of user engagement is dedicated to consuming video content, compared to just a fraction of that just five years ago. Meta’s returns are particularly impressive, given that nearly all the Company’s growth over the past five years has been through organic, internal research and development initiatives. Meta’s stock trades close to just 12X consensus estimates for 2023, which is a substantial discount to the market and very attractive for a business that has monopolistic type returns on capital. Meta’s core Family of Apps revenue grew +10% (currency-adjusted) over 2021 and are up almost +60% over the past 2 years as pandemic-driven behavior has driven an influx of advertisers to Meta’s platforms. Meta Platforms (formerly known as Facebook) detracted from performance during the quarter. “Baseball fans are junkies, and their heroin is the statistic.” You don’t have to ask anyone or play politics. If you do a good job, the numbers say so. Performance attribution is shown gross of fees. Please take into account that attribution analysis is not an exact science, but may be helpful to understand contributors and detractors. Portfolio Attribution is produced by RiverPark Advisors, LLC (RiverPark), the Fund’s adviser, using FactSet Research Systems Portfolio Analysis Application. Top Detractors to Performance for the Quarter Ended June 30, 2022 Top Contributors to Performance for the Quarter Ended June 30, 2022 ( POOL) and increased First Republic Bank ( FRC), PayPal, and Old Dominion Freight Lines ( ODFL). Top performance detractors for the second quarter include Meta Platforms ( META), PayPal ( PYPL), Apple ( AAPL), Alphabet ( GOOG, GOOGL), and Taiwan Semiconductor Manufacturing ( TSM).ĭuring the quarter we sold Starbucks ( SBUX) and trimmed Progressive, Tractor Supply Company ( TSCO), and Visa ( V). Top second quarter performance contributors include Texas Pacific Land ( TPL), UnitedHealth Group ( UNH), and Progressive ( PGR). The Russell 1000 Value Index declined -12.2%. The Russell 1000 Growth Index declined -20.9%. Nitcharee Sukhontapirom/iStock via Getty Imagesįor the second quarter 2022 the Fund declined -17.4%.
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