Fred Alger Management, an investment management company, released its “Alger Mid Cap Focus Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1 2025, U.S. equities faced increased volatility due to shifting fiscal, monetary, and trade policies. The rise of advanced AI models from China, which matched U.S. capabilities at lower costs, intensified this uncertainty. As a result, investors reevaluated the high capital expenditures of U.S. tech firms, leading to a sell-off in AI stocks and concerns over domestic AI returns. Against this backdrop, Class A shares of the Fund underperformed the Russell Midcap Growth in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Alger Mid Cap Focus Fund highlighted stocks such as AppLovin Corporation (NASDAQ:APP). 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 39.63%, and its shares gained 373.04% of their value over the last 52 weeks. On May 28, 2025, the stock of AppLovin Corporation (NASDAQ:APP) closed at $390.26 per share, with a market capitalization of $132.059 billion.
Alger Mid Cap Focus Fund stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q1 2025 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 a large majority of the company’s revenue through its recommendation and targeting engine. In our view, AppLovin gains a competitive advantage, delivering higher-value app installs by leveraging data from its game portfolio and developer partners. 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 detracted from performance after a report from a short[1]selling firm questioned AppLovin’s business practices. In response, the company defended its operations and hired an independent law firm to investigate the claims. Despite these challenges, AppLovin’s focus on AI and machine learning continues to enhance its advertising capabilities, positioning the company for sustained growth in the mobile app ecosystem, in our view.”
