Billionaire Rob Citrone’s Top 5 Stock Picks

4. Amazon.com, Inc. (NASDAQ:AMZN)

Discovery Capital Management’s stake value: $51 million

Percentage of portfolio: 4.38%

Number of hedge fund holders: 274

Discovery Capital lifted its stake in Amazon.com, Inc. (NASDAQ:AMZN) by 169% during the first quarter to 4.38% of its overall portfolio concentration. Shares of the world’s largest online retailer have been under pressure over the past six months due to concerns over slowing growth and lofty valuations. Its shares are down more than 20% year-to-date. In the second quarter, Amazon’s net sales grew by just 7% year-over-year to $121.2 billion compared to high double-digit growth during years past. Its operating income also fell to $3.3 billion in the second quarter and its net loss came in at $2 billion. 

In its second-quarter investor letter, Oakmark Funds, an investment management firm, anticipated solid growth ahead for Amazon. Here is what Oakmark Funds stated:

“Amazon (NASDAQ:AMZN) is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”