Stewart Asset Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be seen here. For the full year 2021, the fund’s Flagship portfolio advanced 22.85%, net of fees. The S&P 500 Index, its benchmark, appreciated 28.71%. For the fourth quarter of 2021, its Flagship advanced 7.74%, and our benchmark was up 11.03%. For the three years ending December 31, 2021, its Flagship portfolio advanced 34.28% per year, net of fees. The S&P 500 Index went up 25.94% per year during the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Stewart Asset Management, in its Q4 2021 investor letter, mentioned Amazon.com, Inc. (NASDAQ: AMZN) and discussed its stance on the firm. Mastercard Incorporated is a Seattle, Washington-based e-commerce company with a $1.6 trillion market capitalization. AMZN delivered a -2.75% return since the beginning of the year, while its 12-month returns are up by 4.46%. The stock closed at $3,242.76 per share on January 14, 2022.
Here is what Stewart Asset Management has to say about Amazon.com, Inc. in its Q4 2021 investor letter:
“Also, some of the investments in the portfolio represent formidable investment opportunities. At the beginning of 2021, our three largest investments were Disney, Amazon and Mastercard. They accounted for about a quarter of the holdings of the portfolios. The share prices of these three global leaders barely advanced last year. We expect that each of these businesses’ profits will grow strongly as 2022 progresses. Their projected price-earnings ratio five years out averages about 13X, which is a very appealing valuation that historically yields strong gains over time.
Amazon presents us with an opportunity to add to the shares as we remain excited about its businesses this year and over the long-term. Amazon remains a growth leader in retail and the digital cloud, and its retail sales continue to grow rapidly. The accelerated build-out of its retail fulfillment capacity permits Amazon to ship many more products in less time. AWS, the company’s cloud business, has accelerated revenue and earnings growth in the past several quarters. It is important to emphasize that the transition to the cloud is still in its early stages, at only 20%-25% of global workloads.
Last quarter was the first time in Amazon’s history that services eclipsed product sales. Profit margins for services are significantly higher than its product-related business. Over the next half-decade, this shift to services should allow Amazon to double its operating margin resulting in very rapid earnings growth.”
Pixabay/ Public Domain
Our calculations show that Amazon.com, Inc. (NASDAQ: AMZN) ranks 3rd on our list of the 30 Most Popular Stocks Among Hedge Funds. AMZN was in 242 hedge fund portfolios at the end of the third quarter of 2021, compared to 271 funds in the previous quarter. Amazon.com, Inc. (NASDAQ: AMZN) delivered a -4.88% return in the past 3 months.
Earlier this year, we also shared another hedge fund’s views on AMZN in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
