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Is it a Smart Move to Continue Investing in Amazon (AMZN)?

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Alphyn Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 3.9% was recorded by the fund for the fourth quarter of 2021, and a 13.9% return for the past year, while its S&P 500 TR benchmark delivered a 28.7% return in 2021. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Alphyn Capital Management, in its Q4 2021 investor letter, mentioned Amazon.com, Inc. (NASDAQ: AMZN) and discussed its stance on the firm. Amazon.com, Inc. is a Seattle, Washington-based e-commerce company with a $1.4 trillion market capitalization. AMZN delivered a -16.24% return since the beginning of the year, while its 12-month returns are down by -13.74%. The stock closed at $2,792.75 per share on January 27, 2022.

Here is what Alphyn Capital Management has to say about Amazon.com, Inc. in its Q4 2021 investor letter:

"Alphabet and Amazon are well known and largely understood by investors. One doesn’t always have to turn over an obscure rock to profit in this business, and good investments are sometimes plainly visible. Nevertheless, I still find it helpful to analyze them on a sum-of-parts basis, as this highlights how they have used their scale to expand beyond their core operations, which will help power their continued growth despite their size.

Amazon has been singularly effective at developing logistics and technologies to solve its own pain points in its original first-party retail business and then building those solutions into fast-growing and higher-margin profit centers. Amazon Web Services (AWS) came out of an effort to efficiently scale up Amazon’s infrastructure to support its retail growth and provide a platform for third-party merchants. In doing so, Amazon realized it could offer on-demand compute services to third-party developers. Today AWS generates almost $60bn in revenue, growing at 38% per year, with 30% operating profit margins. The first-party retail business generates approximately $240bn in revenue at 3% margins; meanwhile, the third-party business generates roughly $100bn of fees at around 30% margins. Amazon’s latest growth area is in selling advertising services to merchants, with revenues of $30bn, growing at 70% per year and margins of approximately 30%.5 In July, Andy Jassy, who built AWS, took over as CEO, and it seems he inherited a company with plenty of growth still ahead."

George W. Bailey/Shutterstock.com

Our calculations show that Amazon.com, Inc. (NASDAQ: AMZN) ranks 3rd on our list of the 30 Most Popular Stocks Among Hedge Funds. AMZN was in 242 hedge fund portfolios at the end of the third quarter of 2021, compared to 271 funds in the previous quarter. Amazon.com, Inc. (NASDAQ: AMZN) delivered a -18.97% return in the past 3 months.

In December 2021, we also shared another hedge fund’s views on AMZN in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.