FV Hedge Funds Have Never Been More Bullish About Amazon

Light Street said the following about Amazon in its Q1 investor letter:

During this crisis, the Internet has become the core operating system of our partially shuttered economy. eCommerce and logistics businesses like Amazon, UPS, FedEx, Uber Eats, DoorDash, Grubhub, and Instacart are now the backbone of the U.S. economy. Light Street’s largest position is in Amazon. Demand for food and home goods is exploding. People are nesting at home, adjusting to the new realities of working from home, and purchasing furniture and apparel to make the best of it. In-home entertainment services are flourishing, including streaming video and gaming, where Light Street is long Netflix and Activision respectively.

Soma Equity Partners agrees with Light Street:

Amazon is poised to take the reigns as the world’s largest company and may never look back. The COVID-19 crisis is accelerating the adoption of online shopping around the world. Online grocery is hitting a notable inflection, with surveys indicating as high as 55% of consumers now buying online. Amazon Grocery is poised to more than triple from a $20billion segment in 2019 to $80 billion by 2023. Amazon’s central role in our lives is perhaps best demonstrated by the adoption of Amazon Prime. Almost three in every four households in the U.S. are now members, approaching 90 million in total.

We acquired our first ever AMZN stake in March near $1,800 per share, representing the only sizable new long we entered during the sell-off. While we typically look for more contrarian positions, we felt particularly motivated by a 20% discount on the company with the biggest stack of chips in the market. The optionality that comes with Amazon’s scale, including deeper forays into media, logistics, and overseas markets, should provide tailwinds to the stock for years to come.

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