The ‘Secret’ Way To Value Amazon.com, Inc. (AMZN)
Amazon.com, Inc. (NASDAQ:AMZN) keeps proving all of its doubters wrong, as shares are up a solid 14% year-to-date. You can cry overvaluation on this one, but it's probably a better idea to look beyond traditional P/E ratios when analyzing Amazon. Here's one way to do that.
To the average investor, there are a multitude of gauges market participants can use to watch their holdings. A pair of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can outperform the broader indices by a superb margin (see just how much).
Equally as necessary, optimistic insider trading sentiment is a second way to look at the investments you're interested in. As the old adage goes: there are a number of motivations for an insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this method if shareholders understand where to look (learn more here).
Keeping this in mind, let's study the latest info surrounding Amazon.com, Inc. (NASDAQ:AMZN).
Hedge fund activity in Amazon.com, Inc. (NASDAQ:AMZN)
In preparation for the third quarter, a total of 69 of the hedge funds we track held long positions in this stock, a change of -1% from the previous quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully.
Out of the hedge funds we follow, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Amazon.com, Inc. (NASDAQ:AMZN). Fisher Asset Management has a $666.6 million position in the stock, comprising 1.7% of its 13F portfolio. The second largest stake is held by Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, which held a $645.6 million position; 8.1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Chase Coleman and Feroz Dewan's Tiger Global Management LLC, Rob Citrone's Discovery Capital Management and John Griffin's Blue Ridge Capital.
Since Amazon.com, Inc. (NASDAQ:AMZN) has faced declining interest from the entirety of the hedge funds we track, it's easy to see that there were a few fund managers who were dropping their positions entirely at the end of the second quarter. Intriguingly, Daniel Benton's Andor Capital Management said goodbye to the largest stake of the "upper crust" of funds we watch, comprising an estimated $66.6 million in stock. Robert Pohly's fund, Samlyn Capital, also cut its stock, about $60.8 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds at the end of the second quarter.
How have insiders been trading Amazon.com, Inc. (NASDAQ:AMZN)?
Insider buying made by high-level executives is at its handiest when the company we're looking at has experienced transactions within the past half-year. Over the last 180-day time period, Amazon.com, Inc. (NASDAQ:AMZN) has experienced zero unique insiders buying, and 12 insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Amazon.com, Inc. (NASDAQ:AMZN). These stocks are PC Connection, Inc. (NASDAQ:PCCC), Liquidity Services, Inc. (NASDAQ:LQDT), Mercadolibre Inc (NASDAQ:MELI), Liberty Interactive (Interactive group) (NASDAQ:LINTA), and eBay Inc (NASDAQ:EBAY). This group of stocks are in the catalog & mail order houses industry and their market caps match AMZN's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
PC Connection, Inc. (NASDAQ:PCCC)
Liquidity Services, Inc. (NASDAQ:LQDT)
Mercadolibre Inc (NASDAQ:MELI)
Liberty Interactive (Interactive group) (NASDAQ:LINTA)
eBay Inc (NASDAQ:EBAY)
Using the results shown by Insider Monkey's tactics, regular investors should always watch hedge fund and insider trading activity, and Amazon.com, Inc. (NASDAQ:AMZN) shareholders fit into this picture quite nicely.