Congrats to Bill Miller

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Today Bill Miller must be very happy, as his fund (Legg Mason Value Trust) core holdings Amazon (5% of $20 b, roughly $1 b) went up more than 20%, this is the second time AMZN came out with a blockbuster quarter this year, and the stock has been up more than 100% in the past 6 months. I think his AMZN made more than $1 b for his clients in a year or so. Last year, largely due to the underperformance of AMZN, Bill Miller’s fund did not beat the market. Many people laughed at him, but he believed in himself.

Would like to talk a little more about AMZN. I believe most people know they are the largest online retailer, they sell things from books to mobile phones.

But in recent years they have used their experience in building online store, and information technology to expand in related areas. They build stores for other retailers, as we can see the “other” options when look for things, in some cases Amazon’s price may not be lowest. This is OK because they still collect money from their partners when customers buy from the partners. Arguably their profit margin on the “3rd party store” is higher than their own store.

They have this “Amazon Marketplace”, which is similar to eBay, and is gaining popularity lately. Their developer program and other web services also bring values to small retailers. Just like I talked about “what exactly is Google, Apple or MasterCard”, we are still trying to figure out what exactly is Amazon.

But when we all figure out what it IS (and its potentials), maybe it’s time to sell the stocks. I’m glad I don’t need to worry about that, it’s bill’s problem 🙂

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