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Time to Take Profits in Amazon.com (AMZN)?

Time to Take Profits in Amazon.com (AMZN)?


Nelson Capital Management, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. In the letter, the fund discussed their economic overview, their asset transactions, tax updates, featured equity, and a special topic about the housing bubble. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

In the Q2 2021 investor letter of Nelson Capital Management, the fund mentioned Amazon.com, Inc. (NASDAQ: AMZN) and discussed its stance on the firm. Amazon.com, Inc. is a Seattle, Washington-based e-commerce company with a $1.6 trillion market capitalization. AMZN delivered a 1.14% return since the beginning of the year, extending its 12-month returns to 4.64%. The stock closed at $3,293.97 per share on August 13, 2021.

Here is what Nelson Capital Management has to say about Amazon.com, Inc. in its Q2 2021 investor letter:

“In the consumer discretionary sector, we trimmed pandemic winners in favor of companies we believe will outperform in a recovery period. We reduced our position in Amazon (tkr: AMZN) following its stellar performance through the pandemic. Though we believe online shopping is here to stay, we think some portion of consumer wallet share will transition to services and experiences.”

most innovative internet of things companies

most innovative internet of things companies

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Based on our calculations, Amazon.com, Inc. (NASDAQ: AMZN) ranks 3rd in our list of the 30 Most Popular Stocks Among Hedge Funds. AMZN was in 243 hedge fund portfolios at the end of the first quarter of 2021, compared to 273 funds in the fourth quarter of 2020. Amazon.com, Inc. (NASDAQ: AMZN) delivered a 2.21% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually 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 great investment idea. For example, lithium mining is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.

Disclosure: None. This article is originally published at Insider Monkey.



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