Updated on May 31st, 2023 by Nikolaos Sismanis
Alkeon Capital Management is a privately-owned registered investment adviser out of New York. The company was formed in 2002 as a spin-off from CIBC Oppenheimer.
Two key individuals govern the firm: Takis Sparaggis, President and CIO, and Alex Tahsili, who performs the Managing Director role.
They both oversee Alkeon Capital Management’s portfolio, currently valued at approximately $45.4 billion, almost all of which is allocated to public equities.
Investors following the company’s 13F filings over the last three years (from mid-May 2020 through mid-May 2023) would have generated annualized total returns of 2.8%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 11.9% over the same time period.
Note: 13F filing performance is different than fund performance. See how we calculate 13F filing performance here.You can download an Excel spreadsheet with metrics that matter of Alkeon Capital Management’s current 13F equity holdings below:
Keep reading this article to learn more about Alkeon Capital Management.
Table Of Contents
Alkeon’s Approach To Investing
Alkeon has stayed away from the spotlight for decades, publishing limited information regarding its operations and investment philosophy. An interview with management from its early days, however, reveals essential info that seems to hold up today.
Its research process is a 100% bottom-up, fundamentally driven, research-concentrated procedure for investing. Their flagship strategy involves identifying significant potential returns in Technology, Media, and Telecom (“TMT”) in the broadest scope. Applying a bottom-up strategy implies that Alkeon focuses on individual securities rather than on the overall movements in the securities market.
Mr. Sparaggis, who holds the final word for any investment, aims for a 12 to 24-month time horizon for Alkeon’s holdings and discourages short-term trading. Alkeon avoids timing the direction of the market and aims to generate alpha based on its exceptional stock-picking skills. It also has an elaborate network of industry contacts, with whom it is in continuous talks in order to identify industry trends before they become apparent to Wall Street.
Alkeon is primarily focused on investing in stocks with impressive growth rates. Many investors hesitate to invest in this type of stock due to their excessive price-to-earnings ratios, but Alkeon has proved competent in identifying high-growth stocks that produce outsized returns. Notably, the average price-to-earnings ratio of the stock portfolio of Alkeon currently stands at under 50.
The company’s in-house risk manager is responsible for periodic checks to ensure diversification among individual securities and sectors, liquidity, and overall fund exposures.
Finally, Alkeon manages its clients on a pari passu basis. In other words, clients are treated in an equal-footing manner and managed without preference. By comparison, some hedge funds may differentiate among multiple classes of clients based on their available capital and reputation.
Alkeon’s Portfolio & Top Holdings
At this point, almost all of Alkeon’s portfolio appears to consist of public equities. The picks reflect management’s tech and communications-oriented strategy. These two sectors occupy around 65% of Alkeon’s portfolio collectively.
Source: 13F filings, Author
Out of Alkeon’s 107 individual stocks, the top 10 holdings account for around 41.4% of its public-equities part of the portfolio. That figure reaches about 60% for its 20 larger picks, indicating a relatively concentrated allocation of funds.
In fact, apart from Meta Platforms stock, which accounts for 11.2% of the fund’s portfolio, no other individual stock accounts for more than 4.1% of the total portfolio, which is quite unique among the various funds we have covered. That being said, the fund’s sector diversification may still be a bit weak sector-wise due to the high focus on tech, communication, and consumer discretionary stocks.
During the period covering Alkeon’s latest 13F filing, the fund initiated and sold the following noteworthy securities:
New Noteworthy Buys:
Wynn Resorts Ltd (WYNN)
Las Vegas Sands Corp (LVS)
Johnson & Johnson Co. (JNJ)
MGM Resorts International, Inc. (MGM)
89bio, Inc. (ETNB)
New Noteworthy Sells:
Apple Inc (AAPL)
QUALCOMM Inc. (QCOM)
Coca-Cola Co. (KO)
Five9 Inc (FIVN)
Alteryx Inc (AYX)
Pinduoduo Inc (PDD)
Qualtrics Intl Inc (XM)
Procore Technologies Inc (PCOR)
As of the fund’s latest 13F filing, the following are the top 10 holdings of Alkeon:
Source: 13F filings, Author
Meta Platforms, Inc. (META)
Shares of Meta Platforms have gained significant momentum lately. By placing emphasis on refining its core platforms, optimizing profitability, and relinquishing previous misconceptions regarding the Metaverse, Meta is poised to witness significant financial improvements in the coming months.
As a result, the overall perception of Meta has undergone a complete transformation recently, with Wall Street now anticipating notable strides in profitability within the near-to-mid-term.
In the meantime, Meta’s family of apps captivates the attention of more than a third of the world’s population every month. Surprisingly, Facebook, Instagram, and WhatsApp continue to attract a growing number of engaged users.
In its Q1 2023 report, the company rejoiced in reaching a remarkable achievement, with Facebook boasting 2.99 billion monthly active users (MAUs), a 2% rise compared to the same period last year, and a combined total of 3.81 billion monthly active individuals (users across all platforms), indicating a notable 5% increase.
Alkeon appears quite confident in Meta’s future, with the stock being its largest public equity holding. The stock accounts for around 11.2% of the fund’s portfolio.
Featuring more than 200 million Prime memberships, Amazon is one of those companies that need no introduction. Amazon is predicted to exceed the $630 billion annual revenues threshold by the end of 2024, thus becoming the largest company in the globe in terms of revenues. Walmart has retained the crown for a long time, whose revenues average about $610 billion per annum.
Wall Street’s sentiment towards the stock has been mixed lately, with the ongoing challenging macroeconomic environment endangering Amazon’s expansion and profitability potential. Still, the stock has rebounded on strong cloud revenues and strong consumer spending.
While the current challenges may persist for a while, Amazon remains a behemoth whose long-term story remains exciting, especially regarding its rapidly-growing AWS segment.
Amazon has been amongst Alkeon’s holdings for quite some time, with the fund initiating a position back in Q4-2019. It is now the fund’s second-largest holding.
Taiwan Semiconductor Manufacturing Company Limited (TSM)
Shares of Taiwan Semiconductor have been under pressure over the past year as concerns over the company’s cyclical business model in a tough macro environment combined with China’s continuous threats towards Taiwan’s sovereignty have spooked investors. Nevertheless, the company’s revenue and net income growth momentum remain incredibly strong, while Buffet’s recent investment in the company makes for a great vote of confidence in the stock.
Taiwan Semiconductor is Alkeon’s third-largest holding. It makes up around 4.1% of its public equity portfolio, with Alkeon raising its interest in the stock by about 44% during Q1.
Microsoft Corporation (MSFT)
Microsoft is an ever-lasting growth powerhouse in tech whose diversified portfolio of essential products and services continues to generate growing cash flows. In line with most growth companies, Microsoft’s growth has slowed lately as global economic growth has also taken a toll. That said, the company remains highly profitable while returning large amounts of cash back to its shareholders, despite the ongoing challenges.
Microsoft’s latest advancements in AI, including the upcoming integration of ChatGPT with its Bing search engine, should also be a growth catalyst that’s worth investors’ attention moving forward.
Microsoft is Alkeon’s fourth-largest holding, despite the fund trimming around 4% of its position during the previous quarter.
Booking Holdings Inc. (BKNG)
Online reservation behemoth Booking Holdings has seen its revenue and profits rebound swiftly following the adverse effects the COVID-19 pandemic caused to its business a couple of years ago. In fact, for the past 12 months, the company recorded record revenues of nearly $18.2 billion.
Further, due to the company’s business model enjoying extremely high margins, investors expect that Booking’s profits will start snowballing in the coming years following the most recent top-line advancements, resulting in shares recently hitting new all-time highs.
Booking Holdings is Alkeon’s fifth-largest holding, making up around 3.6% of the fund’s holdings.
Alphabet Inc. (GOOGL) (GOOG)
Shares of Alphabet have been under severe pressure lately as the ongoing macroeconomic turmoil, including reducing advertising spending and a strong dollar, has materially impacted the company’s ability to grow. Additionally, the company’s profitability has been compressed over the past few quarters due to accelerated hiring and an overall increase in spending.
However, with its latest robust Q1 results and a more promising industry outlook, the tides may be turning for Alphabet.
Overall, the company continues to feature one of the healthiest balance sheets in the market, management returns tons of cash to shareholders through stock buybacks, and its performance should rebound once the general market conditions improve.
Alphabet is Alkeon’s sixth-largest holding despite the fund trimming its position by around 5% during the quarter.
MercadoLibre, Inc. (MELI)
Founded in 1999 by Marcos Galperin, MercadoLibre has grown to become the largest online marketplace in Latin America and one of the most prominent companies in the region. MercadoLibre operates an integrated ecosystem that encompasses various online platforms and services.
Its primary platform is the MercadoLibre marketplace, which allows individuals and businesses to buy and sell various products and services across multiple categories, including electronics, fashion, home goods, automotive, and more. The marketplace operates in 18 countries, including Argentina, Brazil, Mexico, Chile, Colombia, and Venezuela, serving millions of users.
MercadoLibre’s revenues continue to grow at an impressive pace as e-commerce in Latin America gains traction. The company also managed to be sustainably profitable in recent years.
MercadoLibre is Alkeon’s seventh-largest holding, with the fund boosting its position by around 9% during the quarter.
Synopsys develops electronic design automation software products used to compose and test integrated circuits. Both the company’s top & bottom lines have expanded rapidly over the past few years, as Synopsys benefited greatly from the growing global demand for chips.
Analysts are currently expecting annualized earnings growth in the double-digits over the medium term. However, current investors face a very thin margin of safety when trading at a forward P/E of over 38 while still not paying a dividend.
The position was trimmed by 13% during Alkeon’s latest quarter. It is the fund’s sixth-largest position.
American Express Company (AXP)
Founded in 1850, American Express is one of the world’s leading providers of credit cards, charge cards, traveler’s cheques, and various financial products and services. The company operates globally, catering to diverse customers, including consumers, small businesses, corporations, and merchants.
American Express shares are trading notably below their past highs as investors fear that rising interest rates could suppress the company’s credit operations. The company’s financial performance has not displayed any worrisome signs thus far.
American Express is Alkeon’s ninth-largest holding, making up around 2.3% of its total portfolio.
Analog Devices, Inc. (ADI)
Analog Devices makes integrated circuits that are sold to OEMs (original equipment manufacturers) to be incorporated into equipment and systems for communications, computer, instrumentation, industrial, military/aerospace, and consumer electronics applications. ADI was founded in 1965 and is a $88 billion market cap company that’s been increasing dividend payments to shareholders for 19 consecutive years.
While Analog Devices might seem like a legacy company because it earns about 50% of its revenues from products that they’ve been selling for ten years or more, the business is also changing to meet the needs of new markets with its $10 billion investment in Research and Development over the past ten years, and their previous acquisitions of companies like Maxim Integrated, Linear Technology, and Hittite.
Analog Devices is Alkeon’s tenth-largest holding, making up around 2.2% of its total portfolio. The fund boosted its position in the stock by 36% during the quarter.
Final Thoughts
Despite Alkeon’s low profile and preference not to attract media attention, the company is a silent achiever. Its performance has lagged lately due to last year’s sell-off that has primarily occurred in technology and growth equities. Still, in the past, Alkeon has delivered market-beating performance by unlocking the alpha potential on multiple stocks, providing its clients with excellent investment returns.
You can download an Excel spreadsheet with metrics that matter of Alkeon Capital Management’s current 13F equity holdings below:
Additional Resources
See the articles below for analysis on other major investment firms/asset managers:
If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:
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