Tag Archive for AMZN

Scamazon Whiffs Earnings, No One Cares

January 29, 2013 www.hedgephone.com/network

Amazon.com (AMZN) shares are up a solid 10% in after hours trading today, even after earnings missed expectations by nearly every metric. Growth in operating earnings was enough to send shares soaring, but where there is smoke there is usually fire. To be sure, I recently covered a small starter AMZN short position for a profit earlier this week and attempted to re-short the name after the after hours pumping. Unfortunately for me, however, shares of AMZN are currently unavailable to short right now. What this means is that the gap higher likely caused many shorts to cover in a panic while new shorts cannot add to the supply of shares in the market. Meanwhile, the bulls don’t care at all about the fundamentals but only the price, so the fact that the stock is up another 10% doesn’t really influence any of them to sell. If anything, it’s a form of confirmation bias to their underlying thesis of riding the Bezos momentum as long as humanly possible.

Something tells me this all ends badly, however, because at least Apple had earnings and cash flows to buoy the stock on a fundamental basis. With Amazon, the company is incredible but the stock is a bubble.

Here are the numbers raw and un-cut — we aren’t going to spin these but simply present them without comment as we too are in awe of this modern stock market spectacle:

From Reuters:

“The company’s fourth quarter profit declined from the year-ago quarter and was below Wall Street view. Net sales increased 22 percent, but missed the consensus estimate. The company forecast its first quarter sales to grow between 14 percent and 26 percent.”

Actually, the company’s fourth quarter profit didn’t just decline, it plummeted, down from $.38 cents a share last year to $.21 cents a share this year — down 45% is the new up I guess. The company missed bottom line estimates by around 25% and top line estimates were over a billion bucks shy of consensus estimates.

Don’t tell any of these hard facts to market participants, however, as in Amazon’s case any news is bullish even if it’s bad news. One has to wonder what the introduction of state sales taxes will do to Amazon’s razor thin margins and overall business model. Growth at any cost has certainly made this e-tailer a stock you either love or hate passionately. So what do you think the stock is worth? Feel free to comment below and tell me how ignorant I am of the leap in operating earnings and the visionary leadership of Mr. Bezos.

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North Korea Talkin Smack

January 24, 2013 www.hedgephone.com/network
50973.6a00d83451b05569e20112797a607928a4-pi

Could North Korea hit the United States with a ballistic missile? Could it mount a nuclear warhead on the tip of that missile?

Kim 101: How well do you know North Korea’s leaders?

The short answers to these questions are “in theory maybe, in practice probably not” and “no, not yet.” Longer answers revolve around the fact that experts in and outside the US intelligence community have struggled for decades to understand North Korea’s weapons programs and geopolitical intent….

READ MORE:www.csmonitor.com

Somehow this is wildly bullish for pumped up Cramer stocks like AMZN and (CRM), lol…

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S&P 500 Trading Below 200 Day Moving Average

November 14, 2012 Equities

Hold the phone folks! This could be the big one… I wouldn’t own the market index funds if I were you, instead I would be looking for some short ideas like CRM, AMZN, LNKD, etc… We were pretty “lucky” with our calls so far and we still feel the “Hyper-Stagflation Trade” is due for a serious comeback (IE don’t sell your hard assets but short some stock with a tight stop order right at the 200 Day Moving Average on the SPY 1 year chart).

I may have toked a joint or two in my day and maybe Arizona State is not the Ivy League but I do have a degree in Finance, 10 years plus of financial market knowledge and the wisdom to say “hey, diversify a little out of those crappy slips of paper you own known as technology stocks.”

Look, investing here on the long side in anything other than gold or whatever is probably a total longshot. Given that every single Algo-Bot in the entire world is going to short the market beneath the 200 day moving average, you are fighting the smart money. With that being said, while we feel feel Bernanke is close to running out of bullets, we also feel he is skilled at creating one-day melt-up traps for short sellers. I secretly feel Dr. B loves nothing more than disrupting the natural flow of the stock market and the power that his market manipulations command, but we’ll never know his frame of mind when he decides to rip the faces off of some shorts.

The RSI is too oversold for the market model to switch to short here, though we certainly think the evil robots will send the markets into the abysmal pit of a deep bear market in the medium term. All in all, hold your gold and buy some puts on CRM, QQQ, and AMZN.

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Does Doctor B Read Hedgephone Or What?

June 6, 2012 Equities

Like clockwork we had our great and stoic hero threaten the tape with more money printing and that seems to have shored things up. All the better for me, as I moved around half of my trading account (Jaguar Alpha) into Silver the other day after I wrote that I would rather be in silver than in stock for my anticipated Bernanke bounce.

I once actually received a nasty comment from an IP address listed in the home town that Dr. B. comes from in GA… That commenter called me a racist, which is not true. Thankfully, my comment box is so jammed up with spam that I had to disable comments at hedgephone regardless for the time being.

Other issues: I had a face to face with a 6 foot brown bear and had to hike out 15 miles because my car broke down — remember when making timber investments to have a solid, running work truck and also that mother nature rules in the wilderness!!!

I am working on some formatting issues with Apple — I know in Apple’s browser that Hedgephone looks strange and I’m on it!

In any event, we asked Dr. B to print it up and he delivered on Q — I do think it’s better to stop the slides before they violate the 200 day moving averages… Even though I hate it that our economy is now solely based on the stock market, that the stock market is almost completely corrupt thanks to bad INSIDERS in CORPORATE AMERICA and not bad stock brokers or traders as much as BOOK COOKERS, I do recognize that Americans have much of their net savings in the stock market and that many companies are ethically run despite the fact that the SEC is watching porn and not busting scam companies from stealing their shareholders’ money!

In any event, we hope that things turn around and that the SEC starts investigating public corporations, their corrupt board of directors and officers, and the supply chaain and middle management teams that suck these companies dry and leave shareholders flat broke. Just because laziness isn’t a crime does not mean that the SEC should stop investigating corporations which lose 90% of their shareholders’ capital!

THE INTERNET BUBBLE: So I have been arguing at Hedgephone that once Facebook went public the investment bankers would get their huge fees and would stop needing to use the media to pump up the equity bubble that is going on with web 2.0… Sure there is a ton of value in the new media space but that value is not being purchased by today’s equity investor on the Nasdaq — the money was already made by the venture capital and private equity investors… Now, all that buyers of many of these stocks are getting is an empty bag of permanent capital loss. Anyway, we were pretty spot on with our web 2.0 call but made some mistakes recommending AMZN as short versus directly shorting FraudBook (I mean Facebook!). AMZN is more overvalued, but the suckers like it better and the suckers are hard to bet against right now!

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Stock Market: Oversold and Overvalued

May 30, 2012 Equities

A tough combination for traders which is why we are on the sidelines at Hedgephone.com — We are fine with a flat year so long as we can find that one high probability trading set up to make a nice 8-12% yearly return from. Currently, the market is still overvalued and over-loved yet as we discussed here yesterday, on a technical basis the market is very oversold.

In this case, we have no real crystal ball except that summer trading is done on thin volume and means very little in general as all of the “big boys” are in the Hamptons. In our view, that’s a fine place to be as the opportunities to trade here are few and far between. We will update as stocks get cheaper — the lower they go the better they become from an investment/value standpoint and the more we become interested in them. All in all, we think the S&P is fairly valued at around $1050-$1100 so we wouldn’t step in front of the current down leg just yet…

In another 20%, I am sure we will have a lot more to talk about at Hedgephone!

For now, consider the following short ideas: These “leaders” could soon become the laggards if this is the start of the next bear market crash for equities.

CRM

ANGI

AMZN

LNKD

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Observations for May 22, 2012

May 22, 2012 Equities

The behavior of traders in the stock market is a lot like that of a flock of migrating birds. The action is random, but coordinated and a little crazy. All in all, the herd is scared and greedy right now, chasing the hot dot and neglecting anything with a PE ratio under 55X. Not that any of this matters to hedgephone readers because you are all out of the stock market or short stocks during the selloff if you are following our market model. Hedgephone has been off line for a few weeks due to some personal business issues with our staff. We have elected to push forward, however, to deliver our readers an unbiased and seasoned view of market conditions.

Currently, we think the stock market remains overvalued by around 25% and that investors would be better served in income producing real estate, timber or farmland, antiques, select undervalued equities, short select overvalued equities, and in cash.

While Hedgephone is a completely free service for readers and is just one guy’s trading idea blog, readers can at least take heart that none of what we do here is influenced by a sell side or paid promotion bias. We may be invested in the stocks we mention here or we may not be.

Current potential shorts:

AMZN

ANGI

LNKD

QQQ

IWM

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Current potential longs:

BRK-A

KO

PEP

VLO

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We will be back shortly… Apologies for delay in content production. We don’t like to rest on our laurels, but at the same time we would rather be right about the wrong stuff than wrong and long!

The sell off may finally be losing steam, but keep in mind stocks aren’t super-attractively priced until around $1100 on the S&P 500 in my view. The same old manipulation pump and dump BS rules the tape but for now it appears the bears have a pretty good hold of the rope.

That said, like a pulled rubber band the market is oversold based on the RSI and could snap back violently at any time. That’s why we remain mostly in cash.

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4 Possible Short Candidates

May 1, 2012 Equities

Corruption in the stock market is nothing new. Even before the FED and the SEC there were rules for investing in the stock market. Trouble is, nobody actually followed them and it didn’t get any better after the private banks pushed the Federal Reserve into existence in 1913. The Fed was implemented to prevent financial collapse, but they are a huge part of the reason the country entered the Great Depression in 1929 and I would argue that the Fed (after Congress and the Treasury) is the biggest culprit behind our current financial malaise.

What does this historical data have to do with Travelzoo (TZOO) or the price of eggs? Well I’ll get to that in a minute. You see the market price of eggs is a supply and demand issue but it’s also a money supply issue because the more money the central bank prints, the higher the prices we pay for goods and services. The more money we print also means higher prices for internet-bubble equities as well because people make “mal-investments” to keep up with inflation as money comes cheap from low interest rates and QE and needs a sexy investment class to call home. Lately, there has been some dissent amongst Fed members and it seems that the QE free lunch may be the actual reason behind $104 a barrel oil and not the evil speculator. Many Americans are waking up to the fact that the formation of a corporate new world order is not in their best interest.

Speaking of speculation, here are 4 overpriced stocks to short with a tight stop loss or by using call options as a hedge if you think the current ponzi architecture will fail. One thing is certain — watch the 50 day moving average because trend followers will likely short these stocks after selling them if the market heads back below the 5 day. Buying leading stocks is a great strategy in bull markets and many traders follow the Jesse Livermore blueprint by shorting a leader after the overall markets break down. Today’s leading stocks are no different, but timing is everything and investors have to keep an eye on unemployment rates, CAPE PE ratios, the 50 and 200 day moving averages, macro trends, technological developments, innovation, etc. …

READ MORE HERE: http://seekingalpha.com/article/546541-4-possible-short-candidates

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7 Hyped Up Stocks To Sell Short Now

March 21, 2012 Equities

Here are seven fully valued (note the short-seller euphemism) stocks that could possibly tank big time because of overvaluation. Investors who are long these names should at least consider selling calls and buying some puts in our view as the recent rising tide has lifted some pretty leaky boats along the way.

The internet-related industries are undoubtedly the bright spot of today’s economy, but much of that growth is more than priced into many of the leading stocks in the internet industry. The following table shows just how expensive these stocks are. Keep in mind, over the past 100 years or so, the S&P 500(SPY) has averaged 14X peak earnings. Stocks also tend to trade for a small premium to book value — obviously internet businesses have economic moats that are valuable so this type of analysis is less effective in estimating intrinsic value. Still, numbers are all we have to go by and these names look expensive based on the hard data. High beta names often correct the fastest in market downturns as well.

NOTE: I would use stop loss orders or call option protection if you plan to short these as directional trades. Read more here:http://seekingalpha.com/article/449041-7-hyped-up-stocks-to-sell-short-now

TTM PE Forward PE Price/Book
Salesforce.com (CRM) N/A 200X/N/A 6X
Opentable.com (OPEN) 45X 20X 8.5X
LinkedIn (LNKD) 753X 83X 14.6X
Pandora (P) N/A 263X 16X
Amazon.com (AMZN) 138X 80X 10X
Zillow (Z) N/A 53X 9.25
Zynga (ZNGA) N/A 37X 5.46X
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The Market Looks Horrible To Me

March 19, 2012 Equities

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Methinks the stock market is heading lower in quick fashion… That said, the timing is tough to anticipate… Amazon is trading for 130X earnings, the real PE of the QQQ is likely around 30X and the SPY is heading into serious CAPE PE nosebleed territory. All in all, I would either be in a mix of cash gold metals and real estate and on the sidelines or net short. A covered call approach makes sense as well for dividend investors.

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Pairs Trading? 2 Stocks to Buy and 4 to Short

February 29, 2012 Equities

When it comes to pairs trading, finding the exact correlation match or going
long the better of two companies doing battle in an industry is a tough strategy
in my opinion. Personally, I prefer buying great businesses at good prices and
shorting poor businesses at overvalued prices in similar industries as a hedge.
Many times, the overvalued business can jump substantially in the short run and
if you are overexposed to that stock your losses can mount up in lightening
quick fashion in a full blown short squeeze. OpenTable (OPEN)
jumped from $40 a share to $110 a share in less than eight months before
collapsing. The stock was clearly overvalued, it was the shorts frantic buying
to cover orders that drove the stock into the stratosphere. It is this example
that shows why using options or a strict stop loss order policy is key along
with strict position sizing limits in your trades.

Most professional hedge fund managers and prop traders limit trades to a
certain percentage of their portfolio, and if I can remember correctly most of
the “Turtles” shot for no more than 4% in any one trade. I think that’s a pretty
good rule for pairs trading — you don’t want to get concentrated in a long and
short portfolio and you have to watch your correlations and industry news. High
short interest/high PE stocks can become the best short investments of all time,
but first the power of momentum and early shorts being forced to cover can
really rip the faces off of even the smartest short. So figuring in our trading
rules, we would come up with a 2% position long in Yahoo (YHOO) and a 1% position
short in LinkedIn (LNKD) and a 1% short
position in Amazon (AMZN) as a pairs trade.
Likewise, we are looking to put 2% into eBay (EBAY) and to put a 1% short
position on in Qlik Technologies (QLIK) as well as a 1%
short position into athenahealth (ATHN). Overall, you are
only tying up 4% of your equity, because most brokerage accounts will honor this
type of trade without margining your account.

Read the rest of this article here:http://seekingalpha.com/article/401131-pairs-trading-2-stocks-to-buy-4-to-short

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