We recently compiled a list of the 99% of Billionaire Abrams’ Portfolio is in These 11 Stocks. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against the other stocks in David Abrams’ portfolio.
Founded in 1999 by David Abrams, Abrams Capital Management is an investment fund that strives to generate value by leveraging opportunistic and value-oriented investment strategies. Likewise, its portfolio is well-skewed to navigate any challenging macro environment, as it mainly focuses on value investments.
In addition, Abrams Capital Management’s portfolio focuses on diversifying its holdings across various asset classes. Stocks, debt, and distressed securities are some of its top asset classes. Diversification and value investments are some of the strategies that have allowed Abrams to perform better than other hedge fund managers, based on an annualized net return of 15% over the past 15 years.
Abrams Capital Management is primarily invested in the Services sector in the equity markets, which accounts for 25% of its holdings, with Technology stocks accounting for about 11,% followed in third by Basic Materials stocks. The strategic distribution affirms the hedge fund’s focus on sectors with higher prospects for value growth that align with long-term investment philosophy.
In the third quarter, Abrams made significant changes, trimming stakes in some holdings while increasing in others. The hedge fund made no new purchases or sales, reduced holdings in 3 stocks, and did not add to any existing positions. The top 10 holdings constitute 97.75% of the portfolio. The investments are concentrated in seven key sectors. The changes reflect the calculated approach in response to changing macroeconomics.
Our Methodology
To compile the list of billionaire Abrams’ portfolio we scanned Abrams Capital Management’s third quarter portfolio, focusing on the biggest holdings based on investment size. Upon analyzing the stocks, focusing on why they stand out, we ranked them in ascending order based on Abrams Capital Management’s equity stake.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of developers working in unison to create the company’s messaging application.
Meta Platforms, Inc. (NASDAQ:META)
Abrams Capital Management’s Q3 2024 Investment: $355.23 Million
Percentage of Abrams Capital Management’s Portfolio: 5.7%
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) is Abrams Capital Management’s largest holding in the internet content and information segment. The company, which owns some of the biggest networking apps, offers exposure to the multibillion-dollar digital advertising business from which it generates a significant chunk of its revenues.
Meta Platforms, Inc. (NASDAQ:META) benefits a great deal from owning four of the seven most widely used social media platforms worldwide. Facebook, WhatsApp, Instagram and Messenger attract more than 3.2 billion unique visitors daily, each with more than a billion monthly active users. Consequently, the company has become the second-largest ad tech company in the world, behind Alphabet’s Google.
Meta Platforms, Inc. (NASDAQ:META) is using AI to boost engagement and reduce ad costs. AI recommendations have increased time spent on Facebook and Instagram by 8% and 6% this year. On November 20, Meta announced new Messenger features, including AI backgrounds for video calls, HD video calls, noise suppression, and voice isolation. Over a billion people use Messenger monthly.
Meta Platforms, Inc. (NASDAQ:META) delivered impressive third-quarter results on October 30, 2024. The company reported $6.03 earnings per share and $40.5 billion in revenue for Q3 2024, exceeding analyst expectations of $5.22 earnings per share and $40.2 billion in revenue. The growth came as the company attracted more advertising budgets. Increased investment in artificial intelligence to enhance user experience in apps, and enhance engagement levels should allow the company to continue attracting more advertising campaigns.
According to Insider Monkey’s database, 235 hedge funds held Meta Platforms, Inc. (NASDAQ:META) at the end of the third quarter, up from 219 in the previous quarter.
Alger Spectra Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q3 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) operates the world’s largest social network, with over 3 billion monthly active users. The company generates more than 95% of its revenue from advertising, evenly split between North America and international markets. During the quarter, shares contributed to performance following the release of strong fiscal second quarter operating results, with revenues and earnings beating analyst estimates. Management also raised their fiscal 2024 revenue guidance, citing improved advertising monetization. CEO Mark Zuckerberg stated that AI has played a key role in these successes, as the company is leveraging AI to enhance targeting, measurement, ranking, and ad delivery. Higher user engagement, driven by video ranking, content recommendations, and single video views, has also supported growth. Additionally, the optimization of ad placements within videos and automation of ad campaigns are further boosting monetization.”
Overall META ranks 4th on our list of stocks in David Abrams’ portfolio. While we acknowledge the potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.