Seeking Alpha

Timothy Phillips

View as an RSS Feed
View Timothy Phillips' Comments BY TICKER:
Latest  |  Highest rated
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    DS, I have broken down Amazon's internals in more detail than almost anyone and understand the cost structure extremely well (read my articles). Amazon operations are less efficient than Walmart. Please provide a link that proves Amazon's infrastructure makes it cheaper to sell a product to a consumer than Walmart.

    I have heard people reference this over and over, but they never can provide a factual argument that beats the facts I provide above (the financial work I documented in my articles). If it exists I want to understand it and maybe it will change my opinion, so I am hoping you can provide it.
    Jul 9 02:37 PM | Likes Like |Link to Comment
  • Amazon's Reward Could Be Worth The Risks [View article]
    right - you never know! Boy, Gary must be able to retire at this point riding on the back of Capital group.
    Jul 9 01:57 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    PSalerno - I do remember and I also called that once the channel down previous high was broken at $274, this puppy would head up to a new all-time high. This is a typical behavior for the stock a couple of weeks from earnings .. drive up the price to kill freshly minted weak shorts and puts, and take profits at the top pushing it down just prior to earnings and after ... then talking heads tell everyone to buy the dip value, and then rinse and repeat .. very profitable trade pattern.

    From a pure technical standpoint, I agree with you that $291-$292 is most likely that local peak. The recent 5 wave run up just hit it technical peak point at that value (from the $248 bottom), combined with a recent hit on the daily chart RSI that just crossed into overbought territory last night. When those two things occur, this stock usually has an 8-10% drop quickly.
    Jul 9 01:32 PM | Likes Like |Link to Comment
  • Amazon's Reward Could Be Worth The Risks [View article]
    RW, Bezos has said that they sell Kindles at cost in order to gain share (so they can sell digital products). So, just the opposite is true - they have foregone profits for share, and yet they have neither. That is a failure.
    Jul 9 01:24 PM | 2 Likes Like |Link to Comment
  • Amazon's Reward Could Be Worth The Risks [View article]
    Also - how can you brag about 3.7% market share? That is a complete failure after this much time in massively growing market. They can expand market share almost in an unbounded way w/o taking other competitors business in this type of market, and still they cannot.
    Jul 9 09:46 AM | 3 Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    Woody - well said.
    Jul 8 06:33 PM | Likes Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    wdchil .. don't forget to add that Amazon requires a credit/debit card, and 29% of Americans (and much less internationally) do have one. Walmart's business is safe with these customers.
    Jul 8 05:03 PM | 1 Like Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    Hi DS,

    I disagree as the margins have proven that out over long periods of time.

    WMT gross margin was 24.9% in 2012. Amazon gross margin for 1P (Product Revenue) was 13.6% in 2012 (we know this becuase AMZN service revneue is recorded at 100% GM%). So walmart gross margin on direct retail sales is 1,130 basis points higher. Now, about 740 basis point of that delta is due to AMZN 1P shipping expense, but that is a real cost to their business model. The other 390 basis points is due to a combination of pricing and efficiency differences in Walmart's favor. You also cannot ignore the sales tax advantage Amazon had in 2012 which pushed up product margins artificially. What until those comps turn in 2013-2015 as states are beginning to collect now.

    Further - lets look at operating costs .. Walmart spent 19.4% on opex in 2012, AMZN spent 23.4%, so here Walmart's fulfillment, distribution and marketing are significantly more effective (even after you remove AWS R&D spending).

    The journals have a bias with Amazon, as you need to be careful (they tend to downplay the shipping and fulfillment expenses). The numbers published by the companies are more dependable. Also, Amazon inventory turns are no longer more efficient that WMT. Most journals based their comments on that, but AMZN is now up to 45 days and WMT is 47. Amazon's advantage here has disappeared.
    Jul 8 11:24 AM | 1 Like Like |Link to Comment
  • The Threat Of Amazon To Wal-Mart's U.S. Operations Is Real, But Overplayed [View article]
    What evidence do you have that AMZN has a "lower cost structure" than Walmart? I contend the opposite is true, as he income and cash flow statements prove otherwise.
    Jul 8 09:55 AM | 2 Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    PSalerno - agreed. I wrote an article about how bulls value AMZN on 1.8x forward revenue estimate, and why this is a mistake. Here is the link:

    http://seekingalpha.co...
    Jul 4 06:05 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    insiders own about 20% (mostly Bezos), institutions own about 70%, retail 10%.
    Jul 4 06:02 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    Thanks Woody. If you look at all Capital group funds (not just Guardian), they actually own over 11%.
    Jul 3 05:32 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    I have the skeleton done for the eBay vs Amazon article on valuation. Amazon's valuation on almost every metric is 5-9x higher than eBay (you can;t compare P/S as Paulo points out). We're not talking about 50% higher, or even two times .. AMZN is valued an order of magnitude higher !!!
    Jul 3 05:31 PM | 1 Like Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    Glenn - I think that is the issue (retail buying options, they even added mini options on the stock recently to increase retail volume) - the option volume is massive on this stock relative to its underlying volume. They are so expensive because the bear case is obvious and thus large demand for puts, straddles, and covered plays. The issue is that the low underlying volume makes it very easy to pin to max pain each week and crush the option holders nearly every time.

    I have studied the trading patterns of this stock in detail and there is a very distinct pattern. While I am short in a core position because I believe that big drop will come at some point, I also sell puts against that position on technical moves and can almost always get the strike/timing right based on the patterns and can collect big on the high premiums.

    During the first 5+ months of the year, Amazon moved to max pain about 85-90% of the time on Friday. 70% of the time that position was a significant movement up (6x normal stock variation) on Friday to crush the larger put position, with the unwinding in the opposite direction on Monday each time. Not surprisingly that opposite move on Mondays was a similar magnitude (about 25% less) and was down, yes you guessed it - ~70% of the time.

    That is mastery by the funds that can afford to blow out long option positions (in either direction, but mostly killing put buyers), as they have identified a stock that generates returns going it.
    Jul 3 05:35 AM | 1 Like Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    mort - on the average customer spend, the graph I show in the article is for Q/Q comparisons, not Y/Y (chart 1 shows the spend, chart shows the negative growth). You are correct on Y/Y.

    Here is the article: http://seekingalpha.co...
    Jul 2 05:51 PM | Likes Like |Link to Comment
COMMENTS STATS
421 Comments
435 Likes