Bill Nygren and David Herro Comment on Alphabet

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Jul 09, 2020

Alphabet (GOOGL, Financial)(GOOG, Financial), the parent company of Google that is headquartered in the U.S., was the largest contributor for the quarter, returning 22.2%. The share price improved along with the broader U.S. equities market. The company also delivered reassuring first-quarter results in April as exhibited by a 13% increase in total revenue. Both the YouTube and cloud segments of the business grew 33% and 52%, respectively, and YouTube finished March at a high single-digit growth rate, despite the negative impact from the coronavirus. In addition, CFO Ruth Porat indicated the company is already seeing “very early signs of recovery” in search advertising. In our view, the return to more commercial behavior among users is a sign that things are moving in the right direction. Notably, Alphabet executed $8.5 billion in share repurchases in the first quarter compared to $3.0 billion for the first quarter in 2019 and the company indicated that it intends to maintain the increased pace of buybacks for the duration of the year.

From Bill Nygren (Trades, Portfolio) and David Herro (Trades, Portfolio)'s Oakmark Global Select Fund second-quarter 2020 shareholder commentary.