Giverny Capital: “Amazon (AMZN) Clearly is One of the Best Companies on the Planet”

Giverny Capital, an asset management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. For the first quarter of 2022, Giverny Capital Asset Management’s model portfolio declined by 8.21%, net of fees, vs. a decline of 4.60% for the Standard & Poor’s 500 Index. For the trailing twelve-month period, the GCAM model generated a return of 9.63% vs. 15.65% for the Index, also net of fees. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Giverny Capital Asset Management 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 e-commerce company with a $1.4 trillion market capitalization. Amazon.com, Inc. (NASDAQ:AMZN)  delivered a -13.27% return since the beginning of the year, while its 12-month returns are down by -16.60%. The stock closed at $2,891.93 per share on April 28, 2022.

Here is what Giverny Capital Asset Management has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter:

“Amazon clearly is one of the best companies on the planet, and probably most readers are receiving more packages from Amazon this year than last year. Amazon’s cloud computing business, AWS, is a world-beater and today generates most of the profit of the company. But there are a few things about Amazon that concern me.

Amazon generated $325 billion in revenue from its online store plus third-party seller services last year, yet generated only a 2% profit margin in retail. You don’t need to earn high margins to be a great
business. Costco is one of the best companies I’ve ever followed, and it earns only about a 3% margin. But Costco suppresses the margin so that it can offer customers exceptional values. Amazon offers exceptional convenience, but (in my experience) not always exceptional value. Costco also earns extremely steady, and high, returns on capital. Amazon’s returns on capital have trended down significantly recently…” (Click here to see the full text)

Photo by Bryan Angelo on Unsplash

Our calculations show that Amazon.com, Inc. (NASDAQ:AMZN) ranks 1st on our list of the 30 Most Popular Stocks Among Hedge Funds. Amazon.com, Inc. (NASDAQ:AMZN) was in 279 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 242 funds in the previous quarter. Amazon.com, Inc. (NASDAQ:AMZN) delivered a 0.43% return in the past 3 months.

Just last month, 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 2022 Q1 page.

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