![]() ![]() There is a reason why growth stocks have a separate category. If Amazon is a value investment, then the term “value investing” has lost all meaning.Īccording to Buffett himself, value investing has historically meant buying assets at a discount to their intrinsic value, or otherwise seeking a margin of safety through factors like a stable franchise “moat” and predictable cash flows as far as the eye can see.Īmazon may be a legitimately good long-term investment. That has not changed… The considerations are identical when you buy Amazon versus… say a bank stock that looks cheap against book value or earnings of some sort.” “The people making the decision on Amazon are absolutely much value investors as I was when I was looking around for all these things selling below working capital years ago. He was able to say the following with a straight face: It was either Todd or Ted who bought AMZN - but it remains astonishing that Buffett let them do it.ĭuring a Q&A session at the annual Berkshire meeting in Omaha, Nebraska, last weekend, Buffett tried to convince his audience of adoring shareholders that Amazon counts as a value investment. Todd Combs and Ted Weschler, two internal money managers who are seen as Buffett’s successors on the stock-picking side, each manage around $13 billion worth of Berkshire Hathaway assets. In revealing the news to CNBC, Buffett took pains to be clear it was one of the “other guys” who bought Amazon, not him. But that doesn’t change the shock value of Berkshire investing in the most high-profile growth stock on the planet. The TradeSmith research team is long-term bullish on Amazon - more so than on Berkshire Hathaway in fact - for reasons listed here. Yet Amazon is not only a growth stock, it is a hypergrowth stock. To put it simply: Warren Buffett is the ultimate value investor, and Berkshire Hathaway is the ultimate value investing play. What’s more, Amazon’s future depends on radical expansion and radical innovation - making deep inroads into global markets while stepping up the rollout of cutting edge technologies like cashier-free convenience stores, global cloud storage, automated distribution centers, and even drone deliveries. Based on forward-looking analyst estimates for the year 2020, it is trading around 50 times earnings. And Berkshire Hathaway, Buffett’s main investment vehicle since the late 1960s, is the most well-known and revered value investing conglomerate of all time.Īmazon, meanwhile, has a valuation of roughly 80 times trailing 12-month earnings. Warren Buffett is, by far, the most renowned and beloved value investor of all time. This is a “spit out your coffee” type moment. On May 2, Warren Buffett revealed that Berkshire Hathaway bought shares of Amazon as an investment.
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