Updated on August 21st, 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 $57.1 billion, a little less than half of which is allocated to public equities.
Investors following the company’s 13F filings over the last three years (from August-May 2020 through mid-August 2023) would have generated annualized total returns of -17.2%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 9.3% 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
- Introduction & 13F Spreadsheet Download
- Alkeon’s Approach To Investing
- Alkeon’s Portfolio & Top Holdings
- Final Thoughts
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, a little less than half 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 64% of Alkeon’s portfolio collectively.
Source: 13F filings, Author
Out of Alkeon’s 98 individual stocks, the top 10 holdings account for around 48% of its public-equities part of the portfolio. That figure reaches about 65% for its 20 larger picks, indicating a relatively concentrated allocation of funds.
In fact, apart from Meta Platforms stock, which accounts for 13.1% of the fund’s portfolio, no other individual stock accounts for a double-digit percentage 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:
- Invesco QQQ Trust (QQQ)
New Noteworthy Sells:
- Shutterstock Inc (SSTK)
- Altair Engineering Inc (ALTR)
- Lyft Inc (LYFT)
- IGM Biosciences Inc (IGMS)
- Peloton Interactive Inc (PTON)
- Certara, Inc. (CERT)
- Confluent Inc (CFLT)
- DICE Therapeutics Inc (DICE)
- GitLab Inc. (GTLB)
As of the fund’s latest 13F filing, the following are the top 10 holdings of Alkeon:
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 Q2 2023 report, the company rejoiced in reaching a remarkable achievement, with Facebook boasting 3.03 billion monthly active users (MAUs), a 3% rise compared to the same period last year, and a combined total of 3.88 billion monthly active individuals (users across all platforms), indicating a notable 6% increase.
Alkeon appears quite confident in Meta’s future, with the stock being its largest public equity holding. The stock accounts for around 13.1% of the fund’s portfolio.
Amazon.com, Inc. (AMZN)
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.
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 third-largest holding, with the fund boosting its position by around 48% of its position during the previous quarter.
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 Q2 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 bounce strongly once the general market conditions improve.
Alphabet is Alkeon’s fourth-largest holding, with the fund boosting its position by around 62% during the quarter.
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 fifth-largest holding. It makes up around 3.2% of its public equity portfolio, despite Alkeon trimming its interest in the stock by about 12% during Q2.
Tesla, Inc. (TSLA)
Established in 2003, Tesla thrived under the leadership of Elon Musk and became synonymous with cutting-edge advancements in electric vehicle technology and sustainable energy solutions. Notably, Tesla’s efforts in developing autonomous driving technology, epitomized by its Autopilot system and ambitions for full self-driving capability, have set new standards for the automotive industry.
Further, the company’s global network of Gigafactories contributes to its ability to manufacture vehicles and components at scale. Through its innovative products and endeavors, Tesla has managed to grow its revenues and profits swiftly over the years. That said, it remains one of the most controversial stocks on the planet, with both bulls and bears presenting compelling arguments regarding Tesla’s investment case.
Tesla is Alkeon’s sixth-largest holding, making up about 2.9% of Alkeon’s public equities portfolio.
Zoom Video Communications, Inc. (ZM)
Zoom Video Communications, the company behind the widely used video conferencing and communication platform Zoom, enables individuals and organizations to connect virtually through video and audio meetings, webinars, and chats.
The company was one of the greatest beneficiaries of the COVID-19 pandemic. As lockdowns and remote work became the norm, Zoom’s products experienced an unprecedented surge in demand. Its user-friendly interface, high-quality video, and features like screen sharing and virtual backgrounds made it a go-to choice for remote work, virtual events, and online education. That said, Zoom’s growth has lagged in recent quarters.
Zoom Video Communications is Alkeon’s seventh-largest holding, making up around 2.4% of its public equities portfolio.
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 about $19.3 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 eighth-largest holding, making up around 2.3% of the fund’s holdings.
Synopsys, Inc. (SNPS)
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 34.6 while still not paying a dividend.
The position was trimmed by 12% during Alkeon’s latest quarter. It is the fund’s ninth-largest position.
NVIDIA Corporation (NVDA)
Established in 1993, NVIDIA is a pioneering technology company renowned for its advanced graphics processing units (GPUs) and innovative solutions in various domains. NVIDIA’s GPUs initially gained prominence for their applications in gaming, providing immersive graphics experiences.
However, the company’s products saw remarkable demand beyond gaming, especially during the rise of artificial intelligence and machine learning. NVIDIA’s GPUs proved instrumental in accelerating complex computations required for AI training and scientific simulations. The company’s CUDA platform and libraries further facilitated these developments.
Moreover, NVIDIA’s data center GPUs powered deep learning and high-performance computing advancements. Precisely because of the company’s critical role in powering the advancement of major technological frontiers at the moment, shares of NVIDIA have reached stratospheric highs lately.
While Wall Street expects NVIDIA’s revenues to proliferate over the next few years, the stock is currently trading at a forward P/S of over 21, which sounds like an utterly ludicrous valuation for a company operating in a cyclical industry during a rising-rates environment. Hence, NVIDIA is likely one of the most speculative investments in the market right now.
NVIDIA is Alkeon’s tenth-largest holding, making up around 2.4% of its public equities portfolio.
Despite Alkeon’s low profile and preference not to attract media attention, the company is a silent achiever. Its performance may appear terrible versus the overall market, but this is likely due to the limitation involved in computing hedge fund returns. Its AUMs have grown significantly over time, while 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:
See the articles below for analysis on other major investment firms/asset managers:
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