Is Amazon.com (AMZN) a smart long-term buy?
Madison Funds, an investment management firm, has released its Q3 2021 âMadison Investors Fundâ letter to investors – a copy of which can be downloaded here. A quarterly portfolio return of 0.07% was recorded by Class Y shares of the fund for the third quarter of 2021, with a gain of 11.86% year-to-date, compared to gains in the year-to-date. S&P 500 index of 0.58%, for the third quarter and 15.92% year-to-date (YTD). You can check out the top 5 holdings in the fund to get a feel for their top picks for 2021.
Madison Funds, in its letter to investors for the third quarter of 2021, mentioned Amazon.com, Inc. (NASDAQ: AMZN) and discussed his position on the company. Amazon.com, Inc. is a Seattle, WA-based e-commerce company with a market capitalization of $ 1.7 trillion. AMZN has returned 5.31% year-to-date, while its 12-month returns are up 7.69%. The stock closed at $ 3,444.15 per share on October 19, 2021.
Here’s what Madison Funds has to say about Amazon.com, Inc. in its Q3 2021 letter to investors:
âWe added a new modest position weighting to the portfolio during the quarter in Amazon.com, Inc. shares (AMZN). We recognize that many aspects of Amazon’s merit as an investment are well appreciated. However, our work leads us to conclude that stocks are attractive. Leading positions in e-commerce and cloud computing provide the company with significant sustainable competitive advantages in industries that we believe can deliver above-average growth over the next decade. Over the past year, AMZN stocks have followed the market as investors debate near-term growth prospects following pandemic-induced e-commerce demand. Additionally, margins have been depressed due to the unprecedented increase in Amazon spending to develop fulfillment and internal logistics capabilities – Amazon will build more square meters this year and last than it has. cumulatively over the past 10 years, more than doubling its home delivery capacity. We love the investments Amazon is making and believe they will benefit the company more over other retailers, making it nearly impossible for competitors to achieve the same level of delivery speed and convenience. With its large and frequently engaged customer base, Amazon has several mechanisms to make money, including selling advertisements and enhanced subscription services. Within the cloud business, we anticipate that Amazon Web Services (AWS) will leverage its infrastructure as a service (IaaS) strengths to move into higher value segments of cloud computing ( such as Platform as a Service: PaaS), enabling the company to continue to overtake the IT industry as a whole with strong profitability. While Amazon stocks have performed extremely well over the long term, we believe short-term concerns about whether Amazon will earn a return on its accelerated investments now provides an opportunity for investors keen to walk the investment period. Our view is that the investments are likely to generate strong ROIs and extend Amazon’s competitive advantages and above-average growth. “
Photo by Bryan Angelo on Unsplash
Based on our calculations, Amazon.com, Inc. (NASDAQ: AMZN) tops our list of the 30 most popular stocks among hedge funds. AMZN was in 271 hedge fund portfolios at the end of the first half of 2021, compared to 243 funds in the previous quarter. Amazon.com, Inc. (NASDAQ: AMZN) generated a return of -4.33% in the last 3 months.
The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indexes. Our research has shown that small cap hedge fund stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by 115 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the margin of underperformance of these stocks has increased in recent years. Investors who are long in the market and short on these stocks would have reported more than 27% per year between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the top 12 electric vehicle stocks to pick the next Tesla that will deliver 10x yield. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can sign up for our free daily newsletter on our homepage.
Disclosure: none. This article originally appeared on Insider Monkey.