In this piece, we will take a look at the top 5 stocks to invest in according to Alan Fournier’s Pennant Capital. If you want a deeper look at Mr. Fournier’s investment strategies, head on over to Top 10 Stocks to Invest in According to Alan Fournier’s Pennant Capital.
5. Amazon.com, Inc. (NASDAQ:AMZN)
Mr. Fournier’s Stake Value: $26.6 million
Percentage of Pennant Capital’s 13F Portfolio: 7.55%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is one of the world’s largest online retailers that not only functions in the electronic commerce arena but also targets other technology segments such as cloud computing.
Mr. Fournier’s Pennant Capital owns 8,100 Amazon.com, Inc. (NASDAQ:AMZN) shares that represent 7.5% of its portfolio and were worth $26.6 million as of the end of this year’s third quarter. Credit Suisse reduced the company’s price target to $4,200 in an October 2021 note, sharing concerns about increasing costs.
Amazon.com, Inc. (NASDAQ:AMZN) missed both revenue and GAAP EPS analyst estimates during its Q3, by posting $110 billion in revenue and $6.12 in earnings per share. 271 out of the 873 hedge funds polled by Insider Monkey held a stake in the company during the second quarter.
Amazon.com, Inc. (NASDAQ:AMZN) largest shareholder is Ken Fisher’s Fisher Asset Management who owned 1.9 million shares worth $6.3 billion by the end of this year’s third quarter.
In its third-quarter 2021 investor letter, Madison Funds had the following to say about Amazon.com, Inc. (NASDAQ:AMZN):
“We did add a modest new position weight to the portfolio in the quarter in Amazon.com, Inc. stock (AMZN). We acknowledge that many aspects of Amazon’s merit as an investment are well appreciated. However, our work leads us to conclude that shares are attractive. Leadership positions in both e-commerce and cloud computing provide the company with significant durable competitive advantages in industries that we think can produce above average growth over the next decade. Over the past year, AMZN shares have trailed the market as investors debate near-term growth prospects following the pandemic-induced e-commerce demand. Additionally, margins have been depressed due to Amazon’s unprecedented increases in spending to build out fulfillment and in-house logistics capabilities – Amazon will build out more square footage this year and last than it did cumulatively over the previous 10 years, more than doubling its in-house delivery capacity. We like the investments Amazon is making and believe they will further advantage the company relative to other retailers, making it nearly impossible for competitors to match the same level of delivery speed and convenience. With its large and frequently engaged customer base, Amazon has multiple mechanisms to make money, including selling advertising and enhanced subscription services. Within the cloud business, we forecast Amazon Web Services (AWS) leveraging its strengths in Infrastructure-as-a-service (IaaS) to move into higher value segments of cloud computing (such as platform-as-a-service: PaaS), allowing the company to continue outgrowing the overall IT sector with strong profitability. While Amazon shares have performed extremely well over the long-term, we think near-term concerns about whether Amazon will earn a return on its accelerated investments provide an opportunity now for investors willing to look through the investment period. Our view is that the investments likely earn strong returns and extend Amazon’s competitive advantages and above average growth.”
