Funds mull Google exit on $1tn valuation
As Google-parent Alphabet became the fourth US company to top a market value of more than $1 trillion, some funds holding its shares are wondering whether now is the time to cash in on the stock’s extraordinary gains.
Shares of the internet search giant are up nearly 17% over the last three months, outpacing a broader rally in the S&P 500 index over the same period by 6 percentage points.
Short interest in the stock, a measure of how many investors are betting on a price decline, is at 1%, near a 52-week high for the company and higher than competitors such as Microsoft and Facebook. Alphabet joins Apple, Amazon and Microsoft as the only US companies to hit $1 trillion in market value.
“Google is a stock that won’t get you fired,” said Kevin Landis, a portfolio manager at Firsthand Funds.
Will I be able to double my money in this stock from here? I’m not sure about that.
Alphabet’s shares are among a small group of stocks found in the top holdings of both mutual funds and hedge funds, two types of institutions whose investing styles tend to be markedly different, a Goldman Sachs analysis showed.
That could leave it exposed to volatile price swings if sentiment suddenly changes.
Despite those concerns, many investors are finding it hard to say goodbye.
The 28% climb in Alphabet and the performance of other technology and tech-related stocks helped money managers post big gains in 2019, making it difficult for many to justify cutting their exposure even as they fret over the implications of its run-up.
