Amazon Stock Plunges Amid Concerns Over Spending Plans
A recent move by investor Dan Loeb's Third Point fund to trim its stake in Amazon has some investors concerned, but a closer look reveals it was just routine portfolio housekeeping.
The fund reduced its Amazon holding by roughly 10%, which is hardly the kind of dramatic sell-off that would signal a loss of faith. In fact, even after the sale, Amazon remains one of the fund's largest disclosed positions and one of its highest-quality holdings.
Third Point was buying elsewhere during the same period, making this look like textbook behavior of a fund rebalancing its book. Other prominent funds are also increasing their stakes in Amazon, including Seth Klarman's Baupost fund, which boosted its position by almost half.
The debate surrounding Amazon's recent earnings is centered around its growing spending plans and the returns on that capital. While some investors worry the shares have run too far, others see it as a necessary investment to cement Amazon's lead in cloud computing and AI.