Jason Tillberg

Amazon.com, The Value Police and Multiple Markets

Nice article. I fall in the value camp and got stuck being short AMZN and still am. Small short position thank goodness. But still, ugh.

Probably safe to say, it's because of these different methodoligies why stock markets are so incredibly inefficient. Like when AMZN went to 113 in December of 99' to 5.51 just 22 months later. A 96% drop in price. From O'Neil to Graham and that's what you get.

AMZN is back in full swing with O'Neil and I do think a crossover to Graham will return; sooner rather than later, but who the hell knows how high these O'Neil types can take this stock. Another massive correction in price should come soon and bottom in the next 12 - 24 months in my opinion.

Perhaps shorting stocks based on the very idea of a crossover from O'Neil to Graham may prove a sound strategy. The big bucks will be made however when you go from Graham on the cheap to O'Neil on the high. I.E. Buying AMZN in O1' at 5.51 and selling now at 130+.

Short Amazon: Risky Investment at Current Price

All good points and are neccesary in order to see the 26% earnings growth. I do and did consider.
But it still does not justify such a high premium to both net tangible asset value and earnings.


On Oct 27 06:24 AM southbeach wrote:

> interesting perspective, and I somewhat share your skepticism about
> the sustainability of Amazon's current share price. conceptually
> though, there are some factors to consider which I don't think you've
> adequately addressed:
>
> 1. e-commerce market size is growing, and will continue to grow -
> hence it's not a zero sum game for leading ecommerce players - so
> if Amazon grows with the ecomm market, they could still grow earnings
> nicely
> 2. share of ecommerce wallet - Amazon is again well positioned to
> benefit disproportionately from their superior proven ability to
> execute and delight customers - launching new categories, and growing
> strongly in non $ denominated countries (e.g. € zone, Yen) which
> provides a strong lift to dollar denominated earnings, and taking
> more than ecomm market growth rate in overall share
> 3. leverage - Amazon and Walmart will be the players most likely
> to be able to leverage their scale to really crank the revenue handle
> - and generate strong bottom line growth, even on compressed margins.
>
> 4. International growth - see above - the weaker the dollar gets,
> the more international sales in stronger currencies boost earnings
>
> 5. Innovation - Amazon is pushing into some interesting areas (cloud,
> payments) which could further boost their reach and customer base.
> 'Owning' the consumer's transaction info - that crucial billing relationship,
> really aligns with the audience growth objectives of the core business.
>
> 6. Strong management - there are some very good long serving executives
> at Amazon who know the game very well, and this stability allows
> the company to continue their track record of above average execution.
>
>
> So, I'm not joining your short trade just yet (there's a good chance
> of getting run over by the sentiment train right now), but I may
> do so once the post earnings party euphoria starts to fade.

How to Value Amazon?

I used the same logic for First Solar when FSLR was 300 + in May of 2008.

.. I guess what's desperately missing is human capital.

On Oct 26 07:36 AM logicalthought wrote:

> AMZN has continued to amaze me in that it has nothing truly proprietary
> (not even the Kindle) and is essentially just an extremely well-designed
> web site backed by fulfillment warehouses. In theory, one could replicate
> the entire company (currently valued at around $50 billion) for,
> say, $3 billion, consisting of $1 billion to replicate the web site
> and warehouses and $2 billion for an absolutely ubiquitous ad campaign
> to build instant name recognition. Requiring, then, a return on just
> $3 billion of invested capital (vs. AMZN's $50 billion valuation),
> one could then theoretically underprice AMZN on just about everything,
> and therefore massively steal its market share. I don't understand
> why no one has ever done this, so meanwhile, lol, I continue to shop
> at Amazon.

Amazon Short Interest Rising

"The Price Squeeze Indicator (DIPS) remained unchanged and continues to be in the first decile which indicates a low probability of a price squeeze."

Good news for shorts like myself.

Dan Brown's 'The Lost Symbol' on Kindle Outselling the Hard Copy

AMZN is a good reason to know for near sure that this stock market is still a bubble.

Dow Target 6,617, October 25, 2009: Here Is Why

AAII listed its results of its investor sentiment survey. 50% Bullish.

The last time they were 50% or more bullish was in May of 2008 when the Dow was 13,000.

What does that tell you about the euphoria at 9260?

Dow Target 6,617, October 25, 2009: Here Is Why

Judging by most comments, many are in denial that we are headed for a depression in 2010-2012.

Tech boom peaked in 2008 when 90% of households now have internet and cell phones.

Just today CSCO Chairman Chambers said economy still bad. Their revenues are down 18% from a year ago in light of MASSIVE stimulous. What does that tell you?

Baby Boomers demographic has move beyond peak spending years in 2008 as well. They are now SAVERS and will be risk adverse.

This is not much different to the generation of the 20's when by 1928, nearly 90% of households owned a car and had radios.

De leverage or join the ranks of now 34 Million Americans getting food stamps. (That's only reason why we don't have bread lines stretching miles in major cities in America today)

Dow Target 6,617, October 25, 2009: Here Is Why

I'm also long Gold and Silver.


On Aug 05 10:48 AM TWS Investments wrote:

> The market will not see lows again in nominal terms. When the government
> turns on the printing press, asset prices inflate. And, in this
> case, inflate dramatically. In real terms, you may be right, but
> don't expect the charts to tell you where we will be as the Fed destroys
> the dollar.
>
> It is foolish to be short when the printing presses are running.

Dow Target 6,617, October 25, 2009: Here Is Why

Foreclosure buying helps explain home sales. ISM being up probably on account of stimulus. They are still in the toilet.

research.stlouisfed.or...[1][id]=DGORDER&s[...

3.bp.blogspot.com/_pMs...


On Aug 05 08:40 AM Roger Knights wrote:

> "How do you explain existing home sales on the rise, ISM index approaching
> 50, etc. "
>
> Overhanging debt, deflationary real estate prices and declining tax
> revenues, among other things, will prevent efforts at recovery from
> gaining traction. This is not an ordinary business recession.

Dow Target 6,617, October 25, 2009: Here Is Why

From ZeroHedge: "And while earnings are now supposed to increase by 114.9% in two quarters by inhaling green shoots and what not, more curious is out of what hat will revenues stage a dramatic 22% increase in just 6 months."

www.zerohedge.com/arti...


On Aug 05 09:05 AM Obi-Wan wrote:

> It's interesting that you say 'earnings estimates are way too optimistic'
> when there's a stampede of folks yelling that the reason some 77%
> of companies BEAT expections this quarter was becasue they were too
> conservative.....
>
> For every yin....a yang I suppose.....

Amazon Still Looks Overvalued

Hi Steven,

You have a fine understanding of investment value theory. I could not agree with you more.

I'm short AMZN and own June 75 puts along with Oct 80 Puts I purchased the very day AMZN reached 86. Lucky you could say with that trade.

Here's my analysis www.valueinvestingclas...
Jason

The Surprising Strength of Retail

I'm recently short AMZN, BBBY and SPG. Consumer needs to deleverage and has yet to do so. Safe Haven in retail is a near oxymoron.

Thanks for article.

Why Amazon Is Overvalued

They better have something more than just retailing over the internet, how else could they grow earnings 21% per year for the next 5 years? It's a high estimate and they will need to be creative to achieve that kind of earnings growth.


On May 01 09:41 AM Jakeg wrote:

> You've got to remember that Amazon is more than just a retail business.
> They have a cloud computing division that stands to generate huge
> revenue in the coming years along with Kindle, and Amazon Fresh.

Why Amazon Is Overvalued

I never bougtht Starbucks, even when it got to 7. Don't trust long term prospects. From my article on Starbucks however, I indicated two points: 1. "It is in my opinion that many of the earnings forecasts of corporations are too high and are not factoring in these "recessionary times." " and 2. "The best part about the "adjustment" in share prices we're seeing is that over the coming quarters and years, many great companies may very well become great values."

Just how low will Starbucks go before it bottoms is anyone's guess." $7 was pretty darn low.

Remember, stock valuations are a voting machine in the short term and a weighing machine in the long term. MSFT and EBAY both have P/E's now of 10 and 12 respectively. No reason why AMZN can't see a share price in the future with a P/E of 10 down the road.

Investors buy for income, speculators buy in the "hope" of selling at a higher price soon after.

Traders will "speculate" the share price will go to $100 in the short term. Good luck with that.

On May 01 09:21 AM raytayzmd wrote:

> ...oh, look, yet another post as to why AMZN is currently overvalued...and,
> like all the others, it basically rehashes the same arguments...unfortunat...
> those arguments MUST already be factored into the stock price since
> they've been posted several times a month for the past four months!!!...of
> course, in that time period, the stock has doubled -- but, hey, it's
> just money, right?...you would think the guy would've learned a lesson
> last year when he argued what a bargain Starbucks was at $17 a share...then
> I guess he just stood by in wonderment and disbelief as the market
> completely ignored him and sent SBUX down to $7 over the next six
> months...hoo, boy, I bet his clients were sweating that one!...personally,
> with large cap stocks I always presume the market has already absorbed
> and factored in pertinent financial data...and I never presume to
> tell the market what it SHOULD do given that information...with the
> large caps, I say ride the trend and maintain a trailing stop loss...as
> they say, "the trend is your friend."