scott:
i don't see it offhand -- try registering and let us know if you get the offer or not.
fyi
<<<Wrong!
Nov 20, 1998
Rear Echelon Revelations: Where Does the Amazon Story End? Why Does It Matter?
By James J. Cramer
One thing about Amazon (Nasdaq:AMZN - news) , you couldn't find a better-managed stock in the universe. Notice, I did
not say company. There are plenty of better-managed companies out there. But I don't know if anybody knows how to keep a
stock powering higher than Jeff Bezos, who in a previous life, of course, was a hedge fund manager. Bezos manages
Amazon's stock as if it were the bus in Speed; he knows if he slows it down, it might blow up, so he keeps it going max-out at
all times.
Take Thursday. Amazon opened up big and then reversed. Traders and technicians absolutely hate that pattern. I know people who will boot a stock on that kind
of move alone, no matter how much they may love the company. Then, after the close Lycos (Nasdaq:LCOS - news) reported what looked to be -- and I
believe is -- a great Net number. Of course a great Net number means phenomenal revenue and "page" growth. Nonetheless, the darn thing sold off in after-hours
trading. So it looked like a really bad day for Amazon.
But then, right after I hang up from my AOL chat, Amazon was on the tape announcing a 3-for-1 split. Brilliant. Just brilliant. This is the most "retail" of the Net
stocks, yet its $160 price keeps it out of the hands of the people who want to own it the most. A split that brings the stock to $50 and change is positively, well,
Coke (NYSE:KO - news) -like, to recall another company that manages its stock well and also favored 3-for-1 splits.
Anybody who follows the Net knows that AOL just put on the equivalent of 20 presplit points right after it split. To sell Amazon now might be to miss a similar
move. So, the 3-for-1 is exactly what Bezos needed to fuel inject during this brief 11-point pitstop.
This is not the first time I have seen perfectly executed announcements from these guys. Right after Herb Greenberg's potentially devastating story about
Barnes & Noble (NYSE:BKS - news) buying a big Amazon supplier, when the stock looked like it had hit the retaining wall, Amazon announced great CD
sales and a bunch of new initiatives in other merchandising. The stock, which looked like it was rolling over, quickly vaulted back into fifth and it has not looked
back since. Jeff "Gordon" Bezos had struck again.
Why is this perpetual motion so important? Because Amazon is a heavily shorted stock. It is "restricted," meaning you can't borrow the shares to sell them short.
(On my trading sheets from Goldman Sachs, for instance, there is a legend that says that Amazon is subject to short-sale close-out rules, reminding me that, just
in case I didn't know it, I can't sell more stock of Amazon than I own.) There is not enough float available out there to satisfy the shorts. Consequently, as the
stock keeps flying, the shorts have to keep buying it back or risk being "bought in" by their broker. (I have written on this subject numerous times, so check it out
if it still confuses.) The combination of retail buying and short-covering creates virtual rocket fuel for a stock.
How does it all end? My contention is that such a question is meaningless. Stocks aren't organic organisms, you know. They don't live seven dog years and then
die, and they don't necessarily live Methuselah-like either. Valuations are ALWAYS subjective and NEVER a reason to short, despite what you may read in
Barron's. The fact that they sell at two-thirds the value of GM (NYSE:GM - news) or three times the price of Barnes & Noble assumes a level of rationality that
has never over the short term meant a hill of beans to the market. Markets can be inherently irrational for an immensely long time. Odds can be defied for years.
The other night my eldest daughter had to flip a coin 10 times as part of a homework assignment. It came up tails seven straight times. Her conclusion: When you
flip a coin, it comes up tails. I told her it could come up either way, heads or tails, 50-50. She flipped it again. Tails again. "But it didn't, daddy," she said. "you are
wrong." Pretty incontrovertible when you think about it.
Amazon can trade at immense valuations relative to anything for eight quarters in a row, and it may mean nothing about where it will in 2005. In the meantime, you
try telling people who have watched this stock come up tails as long as it has that they are wrong about what's likely to happen next.
As long as the "supply" of Amazon stock is at a radical imbalance with demand, as long as the supply of high-quality Net stocks is out of balance with demand,
and as long as Bezos can keep feeding that rocket-fuel set of releases to the tape, Amazon can go higher. That's enough, sometimes, for a really great run.
Don't forget, it can take a long, long time for things to play out. I remember listening in on a discussion about Boston Chicken (Nasdaq:BOSTQ - news) , where
the participants were certain this thing was a Chapter 11 goner. Everything they said was true. But I had never even been to one at the time. They hadn't opened
one in my hometown yet. When they did I couldn't get in. Way too crowded. Waited outside in line. Listened to the people in line talking about buying the stock
the next day. I bought too; made a ton of money. Got out when they opened two more right next to me and the bathroom in the first one was so filthy I couldn't
take my daughter into it. Booked it.
FIVE years later, the shorts were right. Five years later Boston Chicken came up heads. For some of us, that's just too long to wait.>>> |
