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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: KW Wingman who wrote (4319)	10/20/1998 1:14:00 AM
From: umbro	Read Replies (1) \| Respond to of 18998

Wingman says, have been thinking AMZN (amazon.com) may be slightly (to say the least) overvalued stock and may be a good short prospect.. If you short Amazon, you will have to soon decide whether you are the hunter, or the hunted. There appears to be no rhyme or reason as to why this stock just keeps going up. It seems that its high growth in sales, and its general popularity with 'net users gives AMZN a sort of "protected species" status. This summer, the argument for its rapid advance was "small float" and "short squeeze". Though this was possibly a contributing factor, the numbers didn't completely support that theory. Recently, Amazon has rallied, in the face of (1) financing liquidity problems that have pushed its 10% junk bond debt to effective rates as high as 14% ("making it trade just like Guatemala" according to one trader), (2) a $200 mil. investment by German publishing giant Bertlesman (sp?) into barnesandnoble.com, and (3) a lawsuit filed by Walmart claiming inappropriate use of trade secrets and targeting of WMT's info. sys. personnel. The moral of the story it seems is that a company which is growing the top-line (sales) as quickly as Amazon is given a lot of slack, even thought it continues to lose more and more money each quarter. Eventually, Amazon should fall dramatically in price, but this stock has a habit of making the short seller pay, and pay, and pay.