L1 Capital International, an investment management company, released its second quarter 2022 investor letter. A copy of the same can be downloaded here. The fund returned a -10.1% net of fees in the second quarter compared to the benchmark return of -8.5%. Current macroeconomic issues and geopolitical situations affected the fund’s performance in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
L1 Capital International discussed stocks like Amazon.com, Inc. (NASDAQ:AMZN) in the second quarter investor letter. Amazon.com, Inc. (NASDAQ:AMZN) is an American company, headquartered in Seattle, Washington. On September 2, 2022, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $127.51 per share. Amazon.com, Inc. (NASDAQ:AMZN) had a return of -8.54% for the past month, and its shares lost 26.68% of their value over the last 52 weeks. Amazon.com, Inc. (NASDAQ:AMZN) has a market capitalization of $1.299 trillion.
Here is what L1 Capital International specifically said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) was the largest negative contributor to the Fund during the quarter. Q1 2022 results and Q2 2022 profit guidance were below market expectations. Amazon has been operating in an extraordinary environment since the start of the COVID-19 pandemic. Lockdowns led to an exceptionally rapid shift in retail activity online and Amazon benefitted from a dramatic increase in revenue. Management responded by doubling fulfilment and logistics capacities over a 2-year period – a response which has proven to be somewhat excessive.
Too much capacity, combined with elevated shipping and logistics costs, employee inefficiencies and a resetting of higher share-based compensation have pressured near-term profitability of Amazon’s retail (non-Amazon Web Services) operations. Management changes have exacerbated market uncertainty. We consider these issues to be real and negative to valuation, but somewhat transitory and more than reflected in Amazon’s current share price. Meanwhile Amazon Web Services (AWS) continues to deliver strong, profitable growth, ahead of our base case.
To describe our perspectives on Amazon we are reminded of the opening line in A Tale of Two Cities by Charles Dickens – “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…”. In our tale, one city is Amazon Web Services (AWS), while the other is everything else, which we will refer to as Retail and Other…” (Click here to read the full text)
Amazon.com, Inc. (NASDAQ:AMZN) performed well in this quarter and the stock gained the top position in our list of the 30 Most Popular Stocks Among Hedge Funds. Amazon.com, Inc. (NASDAQ:AMZN) was in 252 hedge fund portfolios at the end of second quarter compared to 271 in the previous quarter.
We discussed Amazon.com, Inc. (NASDAQ:AMZN) in another article and shared Alger Capital’s views on the company. Please check out our hedge fund investor letters 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.
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