Fred Alger Management, an investment management company, released its “Alger Mid Cap Focus Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. U.S. equity markets were favorable in the third quarter of 2024 driven by a dovish monetary policy shift by the Federal Reserve (Fed) and anticipation of a soft economic landing. At the same time, Class A shares of the fund underperformed the Russell Midcap Growth Index in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Alger Mid Cap Focus Fund highlighted stocks like AppLovin Corporation (NASDAQ:APP), in the third quarter 2024 investor letter. AppLovin Corporation (NASDAQ:APP) develops a software-based platform for advertisers to enhance the marketing and monetization of their content. The one-month return of AppLovin Corporation (NASDAQ:APP) was 101.50%, and its shares gained 718.53% of their value over the last 52 weeks. On November 19, 2024, AppLovin Corporation (NASDAQ:APP) stock closed at $321.19 per share with a market capitalization of $107.789B billion.

Alger Mid Cap Focus Fund stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q3 2024 investor letter:

"AppLovin Corporation (NASDAQ:APP) is an advertising technology company offering a digital platform that helps mobile app developers market, monetize, and analyze their apps. We believe the company is experiencing a positive lifecycle change, driven by its AI-powered software engine. While currently focused on mobile gaming, AppLovin is expanding into other market segments. Its Demand Side Platform (DSP) supports ad placements, user acquisition, inventory matching, and performance analytics. Further, we believe AI is central to AppLovin’s growth, driving 60% of the company’s revenue through its recommendation and targeting engine. By leveraging data from its game portfolio and developer partners, AppLovin gains a competitive advantage, delivering higher-value app installs. We believe this scale and data advantage enhances its network effect, improving its technology and boosting market share in mobile gaming. As developers use the platform, the company collects data that continuously refines its algorithms, creating more value and attracting more developers to the ecosystem. During the quarter, shares contributed to performance following better-than-expected fiscal second quarter results, with 75% growth in software revenue, strong pricing, and improved profitability. Management also noted that early pilot results from their new web-based advertising product (click from in-app to web browser) exceeded expectations."

A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.

AppLovin Corporation (NASDAQ:APP) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held AppLovin Corporation (NASDAQ:APP) at the end of the third quarter which was 54 in the previous quarter. AppLovin Corporation (NASDAQ:APP) reported an outstandings third quarter, generating $1.2 billion in total revenue and $722 million in adjusted EBITDA, achieving a 60% adjusted EBITDA margin. While we acknowledge the potential of AppLovin Corporation (NASDAQ:APP) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed AppLovin Corporation (NASDAQ:APP) and shared the list of stocks from Jim Cramer’s best performers list. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.