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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Randy Ellingson who wrote (37776)	2/1/1999 1:28:00 PM
From: larry oertel	Read Replies (2) \| Respond to of 164684

Re: barron's -- any idea who neff is? From Latest Barrons and his comments on AMZN. John Neff, the Windsor and Gemini II funds' once and legendary portfolio manager, needs no introduction. Suffice it to say that he once again interrupted his busy retirement to bring his driest of wits, still-keen eye for value and patient, unperturbable investing style to our table. Q: Don't. Neff: I just know AirTran has had an awful lot of trouble getting their traffic back. They're still flying with low load factors. The last I knew, the stock was around 5 -- that was the same ValuJet stock that got to what, 20? On the other side of the market, I've got a short that's kind of cowardly, I think -- the Nasdaq 100. ". . .a short that's kind of cowardly." Q: You're going to try that one again? Neff: This index is Nasdaq's 100 largest caps. Apparently, it's the only Nasdaq index you can short. You can't short the entire Nasdaq. But you know, the Dow was up 16% last year, the S&P was up 26% and the Nasdaq was up 39%. What do you think the 100 largest caps were up last year -- some of you know, obviously -- 85%. Now, is that getting ahead of itself potentially? And, not too surprisingly, the top five caps accounted for about 39% of the weighting in that index. Microsoft -- good companies, I'll give you that. MacAllaster: People here were shorting that a year ago. Neff: I'm talking about now. MacAllaster: But they were shorting it a year ago. Neff: They're probably a little flattened at the moment. But Microsoft, Intel, Cisco, MCI WorldCom and Dell are the five that are 39% of the Nasdaq 100. Incidentally, all five of those are in the S&P 500 -- and make up 9.3% of the S&P. The Nasdaq 100's cap now is over $2 trillion. It's about 19% of all equities in this country. And, of course, if you go down to the 10th largest, that's Yahoo and the 11th is Amazon.com. A couple of months ago Amazon passed Borders and Barnes & Noble in market cap. Gabelli: Passed them! In one day of trading -- pick any day this year -- the increase in Amazon's market cap was greater than the entire market caps of those companies! Neff: Exactly. Subsequently, Amazon has passed Sears Roebuck in market cap. Think about that for a minute. Now it has almost twice the cap of Sears Roebuck. Where does this all end? I don't know. But, it seems to me that shorting the index futures is kind of a cowardly way to bet that it does end. I had a friend who wanted to short Amazon about a month and a half ago -- but he couldn't borrow the stock. Gabelli: Lucky him. He saved himself 400%. The stock at the beginning of this year was at 300 and change. It has since split 3-for-1 and is at 180 today. In six trading days. So three times 180 is 540, 300 to 540 is 80%. There were 50 million shares pre-split. Its market cap has gone from $15 billion to over $25 billion. Neff: Books are a low-margin business. Barnes & Noble is on the Internet. Can Borders be far behind? Gabelli: But if I take 10 shares of Amazon, I can buy Lillian Vernon and solve all my logistic problems. I can buy this and this and this. If I were them, I'd run awfully hard to make a lot of wonderfully interesting acquisitions. Neff: Do you know that in the most recent quarter, their sales were triple a year ago. But their deficit was also higher than a year ago. It reminds you of the old wheeze about the used-car dealer: He lost $100 on each car, but he made it up on volume! Now, where does this all this silliness end, I don't know. But at some point you get to the last buyer. I can't quite role play who is doing this, you know. Institutions aren't supposed to be in there, although I'll bet the momentum guys and camp followers have come in. Then you've got all these people on computers, mindlessly buying and selling intraday for $9 and scraping a couple of hundred bucks out. Gabelli: Somebody holds $28 billion worth of Amazon today. Neff: At the end of each day, somebody does. Gabelli: They're not my customers; I wish they were. Neff: Obviously, the stemwinders still have half of it or thereabouts. Q: The stemwinders? Neff: The CEO, the founder -- the insiders. You don't want to short Amazon, but selling the futures seems to me a cowardly bet against the mania. As sure as we're sitting here, one of these great companies in this index is going to trip a little bit. When that happens, everybody and his brother is going to try and get out of the stock in one day. And then it will have some effect on the rest.