1 Oct

Amazon: Is Mark Cuban Influenced by Berkshire?

WRITTEN BY Rabindra Samanta

On September 30, billionaire investor Mark Cuban said to Fox Business that he had a stake worth around $1 billion in Amazon (AMZN). He then added, “It’s my biggest holding.”

In May, Cuban told CNBC that AMZN and Netflix (NFLX) were his two largest holdings. Amazon and Netflix are FAANG stocks. Barclays has expressed serious concerns about Netflix’s business model. The Vanguard Group owns a 6.2% stake in Amazon. It’s the largest institutional investor in the stock. 

Amazon: Is Mark Cuban Influenced by Berkshire?

In the first quarter, Warren Buffett’s Berkshire Hathaway included AMZN in his portfolio for the first time. The legendary investor made an interesting change to his portfolio. Buffett’s Berkshire Hathaway sold all its stake in Walmart (WMT) in the third quarter of 2018 before accumulating stake in Amazon. Berkshire Hathaway bought a stake in Walmart in 2005.

Walmart and Amazon are competitors in the retail space. Moreover, in recent years, Amazon has diversified from retail to hardware, search engine, and other areas. In 2018, Buffett said he regretted not including Amazon in his portfolio earlier: “I made the wrong decisions on Google and Amazon.” 

Berkshire Hathaway’s top picks

Berkshire Hathaway bought Apple (AAPL) for the first time in the first quarter of 2016. Moreover, the stock constitutes between 20% and 25% of Berkshire’s total portfolio. Berkshire is the second-largest institutional holder of AAPL at an estimated average buying price of $149.26. On September 30, Apple stock closed at $223.97.

Furthermore, if we look at Buffett’s stock pick performance over more than ten years, his stock picks have risen enormously. In 2006, Buffett bought U.S. Bancorp. Since 2006, USB has returned 166.7%. In 2001, Buffett included the Coca-Cola Company, Wells Fargo & Company, American Express, and Moody’s Corporation. Between 2001 and 2019, these four stocks’ total returns have been 198%, 205.8%, 216%, and 1,842.7%, respectively. These total returns include dividend and price appreciation. Buffett also exited stocks such as General Electric (GE) before the crash. Read Walmart’s All-Time High—Should You Listen to Buffett? to learn more about Berkshire Hathaway’s best exits.

Amazon’s technicals

In 2019, Amazon stock has risen 15.6%. On September 30, the stock settled 3.6%, 4.9%, 6.4%, and 2.3% below its 20-day, 50-day, 100-day, and 200-day moving averages, respectively. AMZN’s price being below these key moving averages indicates bearishness in the stock. Amazon’s acquisition of startup company INLT could have increased bearish sentiments for its price.

Moreover, the stock’s 50-day moving average is trading just 2.7% above its 200-day moving average. If its 50-day moving average falls below its 200-day moving average, the stock could see more weakness. On December 12, its 50-day moving average fell below its 200-day moving average. On December 24, AMZN fell to its 52-week low of $1,307. Its 50-day moving average stayed below its 200-day moving average until April 25.

Correction: An earlier version of this article wrongly suggested that Warren Buffett himself included AMZN in his portfolio rather than Berkshire Hathaway.

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