Bill Miller on Amazon
Value investor Bill Miller spoke about Amazon at the Delivering Alpha Conference. He’s optimistic about Amazon (AMZN). In August 2016, in an interview with Wall Street Week, he said that Amazon is his best pick in 2016.
According to Bill Miller, Amazon’s addressable market is much larger than Facebook (FB) and Google’s (GOOGL) addressable market. Amazon is tracking the global retail market (XRT). The market has the potential of a trillion dollars. He expects that Amazon will have a tremendous performance with continued revenue growth and margin expansion.
Amazon’s business model
Bill Miller is optimistic about Amazon’s business model. Amazon’s business model is unique—the company is passionate about its customers. In its business model, customer requirements are identified individually. The company focuses on tracking more customers. The business is mainly driven by Amazon Web Services. It always tries to provide new features and new services to its customers. Other e-commerce companies such as Alibaba (BABA) also allow customers to purchase goods online. Alibaba acts as a middleman between sellers and buyers, while Amazon is an immense retailer for new and used goods. Its business model signifies that it has the potential to capture the global (ACWI) (VEU) retail market.
According to the institutional ownership report, Vanguard Group is the largest investor in Amazon with 23.7 million shares. JPMorgan Chase (JPM) is the tenth-largest investor with 5.1 million shares.
On a year-to-date basis, Amazon returned nearly 22% as of September 14, 2016. It returned nearly 44% in the past year and 245% in the last five years. The broad-market S&P 500 index (SPY) returned 90% in the last five years. Bill Miller expects that Amazon’s share price could double in the next three years.
In the next part of this series, we’ll analyze Bill Miller’s view on Valeant Pharmaceuticals.