Berkshire also invested profitably in the 10-percent senior notes that online retail giant Amazon.com Inc. (NasdaqNM:AMZN - News) is redeeming this month. "Well, I try to stick with things I understand. Just take Amazon. I mean, I can understand a company that has made it in the consumer field," Buffett said. "I don't understand it well enough to evaluate it, but the bonds were extraordinarily cheap a year, a year-and-a-half-ago, and it was very clear to me that they would not only survive, but thrive." "So, in all cases, I have not felt confident enough about understanding the business to place a valuation on the equity. But I have felt confident enough to buy the bonds," NOTICE: He bought 10% Senior Notes. Thus they were cheap, and their risk was mitigated in that they were senior notes. Many trenches would have had to be crossed before B's investment would have been at risk. Furthermore, now they are being redeemed, so his risk will completely evaporate! He's getting out, while suckers think what he has done means the stock is a good investment. (also of interest is that B used the singular when referring to the co.--"it,", then switched to the plural for "bonds," and maintained the plural when he said "they" would survive and thrive.)
Buffet is NOT selling his bonds. AMZN is calling them back because of its strong liquidity and financial stability. Buffet was willing to buy the bonds because he knows AMZN will be in business for several years.
The stock is over-valued. However, it can stay that way as long as the company survives. Eventually, the valuation will catch up to the stock price.
If amzn is calling the bonds it is because they are at a rate much higher than todays. Not because they are so strong financially knucklehead. Nobody, not even the longest long could say amzn is strong financially they have way to much debt to be in that ballpark. What is their debt rated by moody's or S&P?