Two days ago I posted Amazon - everyone gets it but me wondering who the heck was driving the Amazon.com (NASDAQ: AMZN) share price up to such ridiculous levels. Then I spoke with a fund manager at a large investment company and he reminded me that Amazon shares were very tightly held by a few entities. So I looked it up on AOL Money & Finance and found the following.
- Jeff Bezos still holds 24% of the stock
- Legg Mason Capital Management, Inc. holds 20.25%
- T. Rowe Price Associates, Inc. holds 7.5%
- TCW Asset Management Company holds 5.5%
- ClearBridge Advisors 5.25%.
You can see that the top five shareholders control 62.5% of the stock. Looking further I found that the top ten shareholders own about 75% of the outstanding shares. This does not account for other insiders besides Bezos who hold 3% to 5% of the shares. If 15% to 18% of the shares are sold short that does not leave much play in the market and it allows for the potential manipulation of the shares.
Another issue to consider with Amazon is that while most of there metrics are sky high the P/S is relatively low at 2.71 (TTM) accompanied by a profit margin of 1.77%. To me this is a joke. It means that no matter how much they expand and how many features they add driving the top line up, they cannot equal the margins of a brick and mortar retailer like Wal-Mart (NYSE: WMT) which has a profit margin of 3.27%, approaching double. Where are all the savings the web was supposed to bring to the customer and the enterprise? The customer has done great, but Amazon the enterprise has not. I think Amazon is one big shell game and the few investors that do own this stock should weigh their positions carefully. Amazon closed today at $72.12, down 17 cents.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.
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