Key Highlights
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During the third quarter, hedge fund billionaires Philippe Laffont and Steven Schoenfeld divested from Amazon and increased their holdings in the iShares Bitcoin Trust.
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Wall Street anticipates Amazon’s profit growth at a 19% annual rate over the next three years, suggesting its current price-earnings multiple of 34 is reasonable.
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The momentum is expected to persist as more companies and institutional investors are turning to Bitcoin, which remains the leading and most liquid cryptocurrency.
In the third quarter, two hedge fund billionaires made significant moves. Amazon (NASDAQ:AMZN) position changes were noted alongside an increased stake in the iShares Bitcoin Trust (NASDAQ:IBIT), an ETF managed by BlackRock that tracks Bitcoin’s spot price.
- Philippe Laffont of Corchu Management sold 1.4 million shares of Amazon, cutting his position by 14%. He also acquired 76,100 shares of iShares Bitcoin Trust, more than doubling his investment.
- Steven Schoenfeld from Schoenfeld Strategic Advisors sold 253,700 shares of Amazon, decreasing his stake by 72%. He boosted his iShares Bitcoin Trust holdings by adding 1.1 million shares, a 20% increase.
This is noteworthy because both LaFont and Schoenfeld have notably outperformed the S&P 500 (SNPINDEX: ^GSPC) in the past three years, with increases of 94 and 22 percentage points, respectively. Thus, they both serve as interesting case studies for investors.
Some on Wall Street project that Bitcoin’s value could soar in the future. For instance, Tom Lee from Fundstrat Global Advisors estimates it could reach a market cap of $3 trillion, which would represent an over 3,000% increase from its current level of $95,000. Furthermore, Michael Saylor suggests a price of $13 million by 2045, resulting in a staggering increase of over 13,500%.
Here’s what potential investors should know.
Amazon: Stock Movements by Lafont and Schoenfeld
Amazon excels in e-commerce, digital advertising, and cloud computing, and it has been incorporating artificial intelligence across its various sectors, aiming to drive growth and enhance profit margins.
In e-commerce, it has launched numerous innovations. For example, there’s a Generation AI application aimed at improving efficiency by automating customer service and optimizing logistics. They’ve even created an AI model called DeepFleet for faster warehouse operations.
For cloud computing, Amazon Web Services (AWS) has unveiled new essential services, including Bedrock for developing generative AI applications, alongside AI agents for coding and a business intelligence platform called Quick Suite.
Wall Street’s expectation is for Amazon’s revenues to grow at 19% yearly for the next three years. This appears logical given Amazon’s robust position across several markets, particularly as it leverages AI, with stocks presently trading at a P/E ratio of 34. Many analysts suggest the stock is undervalued, projecting a median target of $300 per share, which would mark a 25% uptick from its current $239.
So, why did Laffont and Schoenfeld decide to sell off their Amazon stocks? It could be seen as profit-taking, or perhaps they found better opportunities elsewhere. However, it’s probably wrong to assume they’ve lost faith in Amazon; both still hold shares, and it remains LaFont’s fifth-largest investment. On a personal note, I think buying at this price could be a worthwhile decision.
iShares Bitcoin Trust: ETF Acquired by Laffont and Schoenfeld
Bitcoin has seen a drop of 25% from its all-time high, with macroeconomic uncertainty and geopolitical conflicts pushing investors away from riskier assets. Profit-taking and the shedding of leveraged positions have also impacted its value. Nevertheless, the investment case for Bitcoin hasn’t diminished.
There is likely to be ongoing demand for Bitcoin. The emergence of Spot Bitcoin ETFs like the iShares Bitcoin Trust has made it easier for individual and institutional investors to enter the cryptocurrency market. As the most recognized and liquid cryptocurrency, Bitcoin often serves as the entry point for many investors.
Interestingly, within the past year, government entities’ BTC holdings increased by 25%, while companies raised theirs by 55%. Additionally, prominent asset management firms saw their iShares Bitcoin Trust shares quadruple.
In summary, Bitcoin is known for its volatility. It’s not uncommon for cryptocurrencies to drop 25% from peak values. This fact may be uncomfortable for investors, but history indicates that Bitcoin generally rebounds to surpass its previous highs.
Indeed, currently, cryptocurrencies appear to be undervalued. Many analysts compare the market value of Bitcoin to its thermocap (the cumulative value of all mined Bitcoins). Bitcoin is trading at 20 times its thermocap, significantly lower than its historical average of 50 times, according to Morgan Stanley.
Risk-tolerant investors with a long-term outlook may want to consider adding Bitcoin to their portfolios, as iShares Bitcoin ETF is an affordable and straightforward option.
Should You Consider Buying Amazon Stock Now?
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