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Hedge Funds Flee Amazon
Many sold ahead of this year’s controversies involving the National Enquirer and a canceled NYC headquarters.
New Yorkers critical of Amazon.com’s planned expansion in Queens, as well as its abrupt cancellation of the project last week, aren’t the only people unhappy with Jeff Bezos’s company. Last quarter, more than 20 hedge funds either trimmed their holdings in the e-commerce giant or sold out entirely, recent securities filings show.
The big sellers who cut their stakes included Tiger Global Management, AQR Capital Management, D.E. Shaw & Co., Millennium Management, Duquesne Family Office, Moore Capital Management, Soros Fund Management, Element Capital Management, Omega Advisors, Ascend Capital, Highland Capital Management, Arrowgrass Capital Partners, Zweig-Dimenna Associates, and Carson Capital. Hedge fund firms Arrowgrass, D.E. Shaw, Millennium, Element, and Highland each sold more than half of their Amazon holdings.
Others sold out entirely during the fourth quarter, according to 13F securities filings last week. They included Point72 (Europe), Taconic Capital Advisors, Two Sigma Investments, Bluecrest Capital Management, Graham Capital Management, Hoplite Capital Management, Jabre Capital Partners, Prisma Capital Partners, R.G. Niederhoffer Capital Management, and Thames Capital Management.
Hedge funds were ahead of the curve, as these sales came before recent headlines about Amazon sent more investors fleeing.
The company’s decision last week to pull out of a planned New York City headquarters before local lawmakers could nix the controversial deal, sent the stock down about 1 percent the next day, as the Dow Jones Industrial Average index gained about 1.7 percent. New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio had signed a deal with Amazon for a second headquarters in Queens that promised to bring 25,000 jobs to the area — in exchange for $3 billion in government subsidies. Political outrage threatened to scuttle the project before Amazon bailed.
But that was just Amazon’s most recent problem. Its shares have been lagging the market — and its tech peers — since Bezos’s personal life became tabloid fodder.
On January 9, Bezos and his wife of 25 years announced they would divorce. Soon after, the National Enquirer released texts the Amazon CEO had sent to his mistress, former television anchor Lauren Sanchez. The scandal heightened after Bezos accused the Enquirer of blackmail and extortion regarding what he called “below the belt selfies” that he had texted to Sanchez. The newspaper had the texts, but had not yet released them.
Since the divorce announcement, Amazon's stock is down about 2 percent through February 19, while the S&P 500 gained 7.5 percent during the same period.
The controversies hitting Amazon come as once-lofty tech giants, including Facebook, Apple, Netflix, and Google's parent Alphabet, have lost their preeminence in the market. Amazon’s shares peaked last September and have since fallen about 19 percent through February 19, far more than the other so-called FAANG stocks with the exception of Apple.
Some analysts think the recent developments are just the beginning of Amazon’s troubles.
“I’m worried the narrative isn’t just about them being distracted, but the public going negative,” Tom Forte, an analyst at DA Davidson & Co, recently said in a Bloomberg news report. “I’ve heard people say for more than a year, that Walmart isn’t the enemy, it’s Amazon. The difference now is it’s not just coming from competing retailers, it’s also coming from the court of public opinion.”
(An earlier version of this story incorrectly stated that Citadel sold its stake in Amazon.)