Boasting a market capitalization exceeding $3.3 trillion, Apple stands as the most valuable public corporation globally.
However, investors might want to consider shifting their focus, at least metaphorically.
While prominent figures like Warren Buffett have been offloading Apple shares, a number of other notable billionaires are turning their attention to another giant: Amazon, with a 2.77% stake.
Here’s the current scenario and its implications for investors.
Billionaire Investors Eye Amazon
Quarterly, major investment managers, hedge funds, and company insiders are obligated to submit 13F filings to the Securities and Exchange Commission (SEC). These documents reveal stock holdings, offering the public a rare peek into which stocks high-profile billionaires are buying or selling.
The latest 13F filings, released last month and covering the quarter ending June 30, 2024, unveiled that several renowned billionaires are bolstering their Amazon holdings.
Take Bridgewater Associates, the hedge fund led by billionaire Ray Dalio, which acquired over 1.6 million Amazon shares. This acquisition more than doubled their stake to approximately 2.65 million shares, valued at around $500 million.
Similarly, Citadel Advisors, managed by billionaire Ken Griffin, expanded its Amazon position by roughly 1.1 million shares, now possessing about 7.7 million shares worth nearly $1.5 billion.
Why Are Billionaires Favoring Amazon?
This surge in purchasing raises the question: “What drives billionaires to amass Amazon shares?”
Firstly, it’s crucial to understand that 13F reports aren’t flawless indicators of billionaire sentiment. They represent a snapshot in time, and funds may have adjusted or liquidated positions before these filings become publicly accessible.
Moreover, 13F forms only require disclosure of long positions, not short ones, making it challenging to discern a fund manager’s true strategy. Is their large investment genuinely optimistic, or merely a hedge? The answer often remains elusive.
Assuming these Amazon positions reflect optimism, what underpins this bullish sentiment?
Several factors come to mind, with Amazon’s remarkable growth being a key highlight.
Despite already achieving over $500 billion in annual sales, Amazon continues to grow at a remarkable rate. In the latest quarter, ending June 30, 2024, the company reported a 10% increase in revenue.
At this pace, Amazon could potentially add nearly $50 billion to its annual sales over the next year. For perspective, that’s equivalent to the annual revenue generated by Nike, a powerhouse in the sports apparel sector and an American icon for more than four decades. In essence, Amazon’s revenue growth is so substantial and rapid that it’s akin to incorporating a company like Nike each year.
Is Amazon Still Worth Buying?
Amazon is undeniably a formidable company. It boasts the largest global e-commerce and cloud services businesses (Amazon Web Services). Additionally, it persistently pushes the boundaries in emerging fields like robotics and artificial intelligence (AI).
In conclusion, deciphering billionaire motivations can be challenging, despite insights from their 13F filings. Nonetheless, Amazon’s strong fundamentals and promising future prospects make it a compelling investment choice.
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