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L1 Capital: “Amazon (AMZN) Has Been Oversold”

L1 Capital, an investment management firm, released its “L1 Capital International Fund” fourth quarter 2022 investor letter, a copy of the same can be downloaded here. In the fourth quarter, the L1 Capital International Fund returned 1.7% compared to its benchmark which had a 4.4% return for the same period. Spare some time to check […] Read More...

L1 Capital, an investment management firm, released its “L1 Capital International Fund” fourth quarter 2022 investor letter, a copy of the same can be downloaded here. In the fourth quarter, the L1 Capital International Fund returned 1.7% compared to its benchmark which had a 4.4% return for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

In its Q3 2022 investor letter, L1 Capital International Fund mentioned Amazon.com, Inc. (NASDAQ:AMZN) and explained its insights for the company. Founded in 1994, Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based multinational technology company with a $994.8 billion market capitalization. Amazon.com, Inc. (NASDAQ:AMZN) delivered a 16.10% return since the beginning of the year, while its 12-month returns are down by -32.53%. The stock closed at $97.52 per share on January 23, 2023.

Here is what L1 Capital International Fund has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:

“Two companies, Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet, detracted more than 0.5% (in AUD) from the Fund’s returns. Both companies reported Q3 2022 quarterly results that were modestly below our expectations. Amazon was by far the largest negative contributor during the December quarter. In addition to a general shift away from higher growth technology businesses, the market has concerns with a slowing in the growth of Amazon Web Services, general macroeconomic pressures on consumer ecommerce spending and elevated costs impacting both Amazon’s ecommerce business and Amazon Web Services.

While we consider these issues to be real and some pressure on Amazon’s valuation justified, Amazon has been oversold. Growth in Amazon’s long term business drivers, cloud computing and ecommerce, remains intact. Amazon continues to be the leader in these two industries, both in the United States and many international markets, with increasing barriers to additional competition. Some cost pressures, like fuel and other shipping costs, are likely to reduce over time, while Amazon’s management is taking proactive steps to reduce headcount and investments with questionable economics, slow logistics infrastructure rollout and improve efficiencies. Investors are currently overly emphasising short-term pressures and under-valuing the longer-term potential of Amazon’s businesses. We discuss some of these issues in more detail on page 7 of this Quarterly Report.”

25 best things to buy on Amazon under $20

25 best things to buy on Amazon under $20

25 best things to buy on Amazon under $20

25 best things to buy on Amazon under $20 (Photo credit: Pixabay)

Our calculations show that Amazon.com, Inc. (NASDAQ:AMZN) ranks 2nd on our list of the 30 Most Popular Stocks Among Hedge Funds. Amazon.com, Inc. (NASDAQ:AMZN) was in 269 hedge fund portfolios at the end of the second quarter of 2022, compared to 252 funds in the previous quarter. Amazon.com, Inc. (NASDAQ:AMZN) delivered a -18.61% return in the past 3 months.

In January 2023, we also shared another hedge fund’s views on Amazon.com, Inc. (NASDAQ:AMZN) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q4 2022 page.

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

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