Alkeon Capital's 109 Stock Portfolio List | Takis Sparaggis Q3 2022 Update

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Alkeon Capital’s 109 Stock Portfolio List | Takis Sparaggis Q3 2022 Update


Updated on November 28th, 2022 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 $30.9 billion, of which around $24.3 billion is allocated in public equities.

Investors following the company’s 13F filings over the last 3 years (from mid-November 2019 through mid-November 2022) would have generated annualized total returns of 1.4%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 10.2% 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 which seems to hold up in the present day.

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, 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.

In terms of risk management, 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

Around 1/3 of Alkeon’s portfolio consists of public equities, while the rest embodies several options, as hedge funds often do to alleviate their risk profile. The picks reflect management’s tech and communications-oriented strategy. These two sectors occupy around 60% of Alkeon’s portfolio collectively.

Source: 13F filings, Author

Out of Alkeon’s 109 individual stocks, the top 10 holdings account for around 32.1% of its public-equities part of the portfolio. That figure reaches about52.3% when it comes to its 20 larger picks, which indicates a relatively concentrated allocation of funds.

In fact, no individual stock accounts for more than 4.7% 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:

New Noteworthy Sells:

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)

Meta Platforms has so far been unsuccessful in convincing both investors and consumers of the metaverse’s potential. Could the market be wrong? The truth is, nobody knows if the metaverse will succeed as a concept or not, at least in the way Meta envisions it. However, one thing is certain. The company is burning tons of cash, and the market doesn’t like it.

How can that be surprising? With the current burn rate at $40 billion per annum, Meta will have to produce hundreds of billions in revenues by some high-handed point over the next decade to have made a worthwhile return on its investment. It may be premature to draw a conclusion, but let’s just say that Meta’s trajectory does not look that inspiring. With revenue growth lagging and CAPEX skyrocketing, Meta will have to focus back on shareholder value creation if it wishes the market to start taking the stock seriously again.

Nevertheless, Alkeon appears quite confident in Meta’s future, with the stock being its largest public equity holding. The stock accounts for around 4.7% 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 $650 billion annual revenues threshold by the end of 2024, thus becoming the largest company in the globe in terms of revenues. The crown has been retained by Walmart for a long time, whose revenues average about $570 billion per annum.

Wall Street’s opinion towards the stock has diverted lately, with the ongoing challenging macroeconomic environment endangering Amazon’s expansion and profitability potential. In fact, shares of Amazon have dropped by nearly 44.8% year-to-date. The shortage of faith in the stock is also mirrored in the lack of revitalized investor interest in spite of its recent 20:1 split.

Still, Amazon remains a behemoth whose long-term story remains exciting, especially when it comes to 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.

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, due to accelerated hiring and an overall increase in spending, the company’s profitability has been compressed over the past few quarters as well.

Nevertheless, 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 overall performance should rebound once the overall market conditions improve.

Alphabet is Alkeon’s third-largest holding despite the fund trimming its position by around 3% during the quarter.

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 these days, Microsoft’s growth has slowed down 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 is Alkeon’s fourth-largest holding, despite the fund trimming around 7% of its position during the previous quarter.

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, trading at a forward P/E of over 37.7 while still not paying a dividend, current investors face a very thin margin of safety.

The position was trimmed by 10% during Alkeon’s latest quarter. It is the fund’s fifth-largest position.

Apple Inc. (AAPL)

Under Tim Cook’s leadership, Apple continues to dominate the premium smartphone and portable devices space, while its growing higher-margin services revenues provide a nice boost to its earnings growth. With its sales remaining rather unaffected even during the current tough trading environment, shares of Apple have held their ground relatively well against most mega caps. Yet, some investors argue the stock remains overvalued, as many are still willing to pay a premium for the stock.

Apple is a new holding for Alkeon, with Alkeon initiating a position during Q3 2022. It’s now the fund’s sixth-largest holding.

QUALCOMM Incorporated (QCOM)

QUALCOMM is a relatively new position in Alkeon’s portfolio. The fund initiated a position in Q4 2021, yet QUALCOMM quickly ascended amongst the fund’s top holdings.

“Quality Communications” was started in the living room of Dr. Irwin Jacobs in 1985. The company’s first product and service was a satellite used by long-haul trucking companies that could locate and message drivers. Qualcomm, as it is known today, develops and sells integrated circuits for use in voice and data communications. The chip maker receives royalty payments for its patents used in devices that are on 4G and 5G networks.

The company has grown earnings-per-share at a rate of 6.6% per year over the last decade. Its agreements with Apple and Huawei, a declining share count, and leadership in 5G should allow the company to grow in the coming years. We also believe that demand for 3G/4G/5G headsets will increase following a recovery from the COVID-19 pandemic.

QUALCOMM also numbers 20 years of consecutive annual dividend increases, featuring a 5-year dividend-per-share CAGR of 5.25%.

QUALCOMM is Alkeon’s seventh-largest holding, making up 2.6% of its portfolio. The fund boosted its position by 10.2% compared to the previous quarter.

Cadence Design Systems, Inc. (CDNS)

Cadence Design Systems offers software, hardware, services, and reusable, integrated circuit design blocks internationally. The company’s functional verification services, comprising of emulation and prototyping hardware, allow its clients to perform chip verification.

The company’s revenues and net income have been expanding at a very consistent and rapid pace over the past decade. A dividend has yet to be initiated, nonetheless.

Cadence has had a place in Alkeon’s portfolio since late 2014. The fund trimmed its position by 10% during the quarter but still owns around 1.2% of the company’s outstanding shares. It’s now the fund’s eighth-largest holding.

Taiwan Semiconductor Manufacturing Company Limited (TSM)

Shares of Taiwan Semiconductor declined massively 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 $4.1 billion investment in the company makes for a great vote of confidence in the stock.

Taiwan Semiconductor is Alkeon’s ninth-largest holding. It now makes up around 2.4% of its public equity portfolio.

Visa Inc. (V)

Visa is the world’s leader in digital payments, collecting “digital royalties” on every single transaction that is processed through its debit and credit cards. The company’s revenues and net income took a hit last year as COVID-19 had a temporarily damaging effect on consumer spending. However, the company’s growth has now resumed, while Visa is actually benefiting from the ongoing highly-inflationary environment since the percentage it collects in every transaction benefits from higher nominal spending.

Visa is Alkeon’s tenth-largest holding, accounting for 2.3% of its public equity portfolio.

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 as a result of the ongoing 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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