giofranchi Posted March 24, 2016 Share Posted March 24, 2016 Bezos Prime http://fortune.com/amazon-jeff-bezos-prime/?xid=soc_socialflow_twitter_FORTUNE Cheers, Gio Link to comment Share on other sites More sharing options...
Jurgis Posted March 24, 2016 Share Posted March 24, 2016 This is great, who is the quote by? Francois Rochon: http://www.givernycapital.com/en/doc/206/Giverny_Capital_-_Annual_Letter_2015_web_.pdf Link to comment Share on other sites More sharing options...
rpadebet Posted March 24, 2016 Share Posted March 24, 2016 This is great, who is the quote by? Francois Rochon: http://www.givernycapital.com/en/doc/206/Giverny_Capital_-_Annual_Letter_2015_web_.pdf Nice letter. Concise, thoughtful and rational analysis with some amazing results too Link to comment Share on other sites More sharing options...
GregS Posted April 6, 2016 Share Posted April 6, 2016 I'm surprised to see no one posted Bezos' letter to shareholders: https://www.sec.gov/Archives/edgar/data/1018724/000119312516530910/d168744dex991.htm Some great insights in this one even if you're not a shareholder. One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments. We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness, and risk-acceptance mentality normally associated with entrepreneurial start-ups. Can we do it? I’m optimistic. We have a good start on it, and I think our culture puts us in a position to achieve the goal. But I don’t think it’ll be easy. There are some subtle traps that even high-performing large organizations can fall into as a matter of course, and we’ll have to learn as an institution how to guard against them. One common pitfall for large organizations – one that hurts speed and inventiveness – is “one-size-fits-all” decision making. Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups. As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.1 We’ll have to figure out how to fight that tendency. And one-size-fits-all thinking will turn out to be only one of the pitfalls. We’ll work hard to avoid it… and any other large organization maladies we can identify. Link to comment Share on other sites More sharing options...
Liberty Posted April 6, 2016 Share Posted April 6, 2016 This year's letter is very good, I recommend it. Link to comment Share on other sites More sharing options...
arcube Posted April 6, 2016 Share Posted April 6, 2016 This year's letter is very good, I recommend it. True. Here attached in easily readable format. 2015_Letter_to_Shareholders.PDF Link to comment Share on other sites More sharing options...
giofranchi Posted April 18, 2016 Share Posted April 18, 2016 I have opened a small position in AMZN. I think it is a wonderful business, and Bezos is a wonderful manager (still young and very driven). I am not comfortable with its valuation, but my downside is limited, while I could average down a lot if a correction in price comes. Cheers, Gio Link to comment Share on other sites More sharing options...
Palantir Posted April 28, 2016 Share Posted April 28, 2016 AMZN up 12% after close. Gift that keeps on giving... Link to comment Share on other sites More sharing options...
plato1976 Posted April 29, 2016 Share Posted April 29, 2016 it will be a real long-term pain to short this beast your loss will become bigger and bigger year after year never short a real growth stock... btw, my only concern is that gio opened a position :) AMZN up 12% after close. Gift that keeps on giving... Link to comment Share on other sites More sharing options...
giofranchi Posted April 29, 2016 Share Posted April 29, 2016 btw, my only concern is that gio opened a position :) Ahah!! But don't worry! The "Gio effect" works in reverse for small positions: they will continue skyrocketing! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 29, 2016 Share Posted April 29, 2016 This year's letter is very good, I recommend it. True. Here attached in easily readable format. Thanks. Link to comment Share on other sites More sharing options...
Uccmal Posted May 3, 2016 Share Posted May 3, 2016 Amazon is a really well managed company but It is well into fantasy valuation. I have followed it since forever. Some comparisons: Amzn has a market cap of 320 B tonight. It is trading at 3.2 x revenues. pe= 500; p/b = 22; p/cf = 45; P/fcf around 60 x; Operating margin = 2% Walmart's market cap is 200 B with a revenue of 475 b; Pe = 14.5; p/b = 2.7/2.8; pcf= 8x; operating margin of 5%. At its present market cap amazon is surpassed only by facebook, google, msft, aapl, and xom, and berkshire, in the US. It seems to me that there is no way that amazon ever catches up to its valuation at this price. I dont see how they get the margins up when they are essentially in a race to the bottom. Not to suggest that amazon doesn't have alot of value but to accord it at value above walmart is pure fantasy. So, what's my point. I sold 200 calls (2 contracts) on Amazon, when the stock was at 660, with a strike of 660, 2018s. The sale price was $115.00 US implying that the stock will close in 1.7 years with a market cap of 370 B. At some point in the next 1.7 years, Amazon will reset, or the markets will reset, or the economy will reset, or fuels prices will rise. BTW! I do admire the company, and am an occasional customer. Selling the calls is partly a protective bet on a market retreat, with markets floating near an all time high. Idea was courtesy of JEast, although he suggested doing this with a basket of similar overvalued stocks Link to comment Share on other sites More sharing options...
EricSchleien Posted May 3, 2016 Share Posted May 3, 2016 Why not buy the puts? It seems like selling naked calls (when you don't own the underlying stock) can be dangerous if you don't get your timing right. Link to comment Share on other sites More sharing options...
Andrew6892 Posted May 17, 2016 Share Posted May 17, 2016 I don't think it's a good idea to be short AMZN or sell naked calls. Amazon is an incredible company that is certain to be much larger and more profitable in the future. One can intelligently debate what long-term expectations are priced in, but valuation shorts on great companies with open-ended growth runways are a difficult way to make money. If you're wondering if I have any credibility on the topic, I last posted my comments on Amazon here in 2014. Link to comment Share on other sites More sharing options...
Liberty Posted May 25, 2016 Share Posted May 25, 2016 47-minute interview with Bezos. Sorry if a repost. https://www.washingtonpost.com/video/postlive/prime-time-a-conversation-with-jeff-bezos/2016/05/18/3ceb5154-1d55-11e6-82c2-a7dcb313287d_video.html Link to comment Share on other sites More sharing options...
Oreo Posted June 9, 2016 Share Posted June 9, 2016 I've looked at the AMZN bear theses and so far, the most credible bearish arguments are: 1. Regulation / tax. As AMZN grows and takes an ever-greater percentage of household spending and retail GDP, the business will get more regulated. We might be seeing an analogous situation play out with GOOGL, for instance. 2. Difficult to calculate true economics of the business. Tough to break out what unlevered (and levered) free cash flow is being generated by the e-commerce business vs AWS; similarly, tough to ascertain precisely what the IRRs (i.e. ROICs) are on a dollar spent in each of those businesses. The heavy use of leasing further obfuscates the situation. To AMZN's critics, it makes the business a black box. I have not seen anyone on COBF (or elsewhere on the internet) discuss the above points thoroughly and arrive at a conclusion. As long as the market's attitude towards AMZN's disclosure practices (particularly on cash-generation / segment ROIC / segment FCF / project IRRs on leasing) does not change, I see the stock going up. That's the path of least resistance. Link to comment Share on other sites More sharing options...
dwy000 Posted June 9, 2016 Share Posted June 9, 2016 Difficult to calculate the economics of the business. No reference to price or value. "Up" is the path of least resistance. Doesn't feel like investing, it feels like riding momentum. Good luck. Link to comment Share on other sites More sharing options...
rkbabang Posted June 9, 2016 Share Posted June 9, 2016 I've looked at the AMZN bear theses and so far, the most credible bearish arguments are: 1. Regulation / tax. As AMZN grows and takes an ever-greater percentage of household spending and retail GDP, the business will get more regulated. We might be seeing an analogous situation play out with GOOGL, for instance. 2. Difficult to calculate true economics of the business. Tough to break out what unlevered (and levered) free cash flow is being generated by the e-commerce business vs AWS; similarly, tough to ascertain precisely what the IRRs (i.e. ROICs) are on a dollar spent in each of those businesses. The heavy use of leasing further obfuscates the situation. To AMZN's critics, it makes the business a black box. I have not seen anyone on COBF (or elsewhere on the internet) discuss the above points thoroughly and arrive at a conclusion. As long as the market's attitude towards AMZN's disclosure practices (particularly on cash-generation / segment ROIC / segment FCF / project IRRs on leasing) does not change, I see the stock going up. That's the path of least resistance. #2 isn't really a bear argument as it makes shorting the stock as risky as going long. It is an argument for standing by and watching from the sidelines as I have unfortunately always done with this one. Link to comment Share on other sites More sharing options...
KCLarkin Posted June 9, 2016 Share Posted June 9, 2016 2. Difficult to calculate true economics of the business. Tough to break out what unlevered (and levered) free cash flow is being generated by the e-commerce business vs AWS; similarly, tough to ascertain precisely what the IRRs (i.e. ROICs) are on a dollar spent in each of those businesses. The heavy use of leasing further obfuscates the situation. To AMZN's critics, it makes the business a black box. The wonderful thing about Amazon is that it is impossible to value. Or rather, all of the value is far in the future. Move your telescope an inch to the right and Amazon is worth $1 trillion. A little to the left, it is worth $100 B. This makes it a perfect speculative/momentum stock. Patrick O'Shaughnessy has great perspective on this: http://investorfieldguide.com/fun-with-f-a-n-g/ In our case, the inside view is trying to explain why Amazon in particular can achieve this amazing growth rate, which would go something like this: Amazon is my favorite company, it is doing things no one else can or has. AWS is amazing, and is a higher margin business. Slight upticks in margin would significantly grow earnings. The outside view, by contrast, is the historical base rate (percentage chance) of ALL companies hitting that type of growth rate over ten years. Again, a fraction of 1% of companies have been able to achieve this rate. The inside view is always more seductive, but the outside view is more sobering and usually more useful. Will Amazon be the next company to grow that fast? Could be. But based on the outside view, the odds are about 9 times worse than hitting a random number in roulette. Link to comment Share on other sites More sharing options...
prevalou Posted June 9, 2016 Share Posted June 9, 2016 calculating base rates for something unique is not very relevant. the outside view is interesting when there is a pattern. Link to comment Share on other sites More sharing options...
KCLarkin Posted June 9, 2016 Share Posted June 9, 2016 calculating base rates for something unique is not very relevant. the outside view is interesting when there is a pattern. Based on my understanding of Kahneman and Tversky, I don't think that statement is true. But there is a clear pattern. Expensive stocks tend to underperform. Hyper-growth tends not to be sustainable. Of course there are spectacular exceptions. Otherwise, nobody would ever buy an expensive growth stock. And the stocks would cease to be expensive. I'm old enough to remember when Cisco, Yahoo, Ebay, Nortel, Walmart, Intel, GE, and Microsoft seemed just as invincible as Amazon seems today. So I am biased. Carry on. -- Cisco the $1 trillion company: http://www.bizjournals.com/sanjose/stories/2000/03/20/story2.html Amazon the $3 trillion company: http://finance.yahoo.com/news/chamath-palihapitiya-says-amazon-could-be-a--3-trillion-company-174748494.html Link to comment Share on other sites More sharing options...
prevalou Posted June 9, 2016 Share Posted June 9, 2016 I don't know if Kahneman and Tversky are great investors...anyway i agree with your statement : expensive stocks tend to underperform. The question is: is AMZN price expensive ? Comparing it with Cisco or Yahoo is a bias. Berkshire Hathaway too seems invincible ... Link to comment Share on other sites More sharing options...
bonkers Posted June 9, 2016 Share Posted June 9, 2016 Amazon is a large corporation with huge market cap and probably enough free float. Warren and Charlie seem to respect Bezos and what he's done, and consider Amazon a formidable threat to many American (or even BRK) businesses. My question is, why haven't Warren and Charlie (or even Ted and Todd) ever bought AMZN shares for Berkshire? Could it be that these extremely competent investors do not consider it a promising long-term investment? ::) Link to comment Share on other sites More sharing options...
Oreo Posted June 9, 2016 Share Posted June 9, 2016 why haven't Warren and Charlie (or even Ted and Todd) ever bought AMZN shares for Berkshire? Could it be that these extremely competent investors do not consider it a promising long-term investment? ::) No offense but that's a worthless argument. This kinda slavish, blind adulation of well-known investors is what led people to end up going long VRX or ZINC. Link to comment Share on other sites More sharing options...
KCLarkin Posted June 9, 2016 Share Posted June 9, 2016 The question is: is AMZN price expensive ? Amazon is impossible to value with any degree of accuracy. On a purely objective basis (using GAAP earnings), it has a history of not earning its cost of capital. So it is perhaps worth book value of $31. The present value of Chamath's $3 trillion is $2400. I am pretty confident it is worth between $31 to $2400. This is where the concept of the outside view can help. At $700/share, you need a combination of sustained high revenue growth (which is very rare for a company this large) combined with exceptional margins (for a retailer). Are there any historical precedents for the implied growth and margins? None that I am aware of. Are there any precedents for exceptional companies that grew very quickly, dominated their industry, and had a "lost decade" solely because they became overpriced? That list is very long. -- To get a good return from the current price, you are literally betting on something completely unprecedented. It certainly seems plausible. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now