3. Amazon.com, Inc. (NASDAQ:AMZN)
Value of Appaloosa Management‘s 13F Position: $164 Million
Number of Hedge Fund Shareholders: 271
David Tepper trimmed his stake in Amazon.com, Inc. (NASDAQ:AMZN) by 4% during the third quarter, leaving Appaloosa Management with 1.45 million AMZN shares on September 30. Hedge fund ownership of Amazon ticked up during Q3 after falling by nearly 10% during the first half of 2022. Multiple funds have billion-dollar positions in Amazon, including Ken Fisher’s Fisher Asset Management and David Blood and Al Gore’s Generation Investment Management.
Amazon.com, Inc. (NASDAQ:AMZN)’s bottom-line has been hit hard this year by rising costs and inflation-weary consumers, which has scared off some investors, though not hedge funds for the most part, who see Amazon’s longer-term picture being as bright as ever. The ecommerce giant has exceptional growth opportunities, both in North America and particularly abroad, and Amazon Web Services is still growing at a stellar rate and buffering the temporary downturn in the ecommerce side of Amazon’s business thanks to its strong profitability.
Baron Funds also discussed Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter, suggesting the company has a huge runway for growth in both its core ecommerce platform, as well as AWS:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-overyear. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”
