Tag Archives: AMZN

The Writing Is On The Wall: Latest Issue Of Short Seller’s Journal Is Up

It’s been estimated that at least a third of the 175 oil producing companies in the U.S. are at risk of slipping into bankruptcy this year. At some point banks are going to have to start foreclosing on defaulted loans and many companies will be forced to liquidate. Shell Oil announced this past week that it is exiting its North American shale operations. The writing is on the wall. This is going to inflict a significant amount of damage to the U.S. economy – an amount of damage that is not yet being anticipated by investors or by the policymakers.  – the February 28th issue the Short Seller’s Journal

This week I feature a two stocks that can treated either as a “quick hit” or positioned as a long term short. I’m also going to include a highly undervalued silver mining stock as a “contra” stock market idea. For new subscribers, because the precious metals sector tends to move inversely to the stock market, going long mining shares is similar to shorting stocks.

I also review some strategies for using puts to either speculate on a big move lower or replicating a longer term short position in AMZN – see AMAZON dOT CON.

You can subscribe by clicking on this link – SHORT SELLER’S JOURNAL – or on the image below.  Subsribers to SSJ will be able to subscribe to the Mining Stock Journal for half-price.  The debut issue should be out this upcoming week or the following week at the latest.

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AMAZON dot CON: Find Out Why The Stock Was Slammed After Q4 Earnings

A reader reports: Hi Dave, I’m in the Amazon puts with 300 strike price that I bought on Jan 17 before they reported earnings. I’ve made $7500 on the trade. Also I read that you think silver is the play of the decade! I’m going to take those profits plus $2500 and buy a box of silver eagles and put the rest of my capital from the put trade back into more AMZN puts!  Thanks!

NOTE:  AMZN has run up over $40 since its post-earnings slam.  Of course Jeff Bezos being the consummate stock market operator announced a $5 billion share buyback. He’s attempting to push the stock back up because he dumps shares every month and, more important, when AMZN drops back to earth (i.e. below $100) he’ll have a cadre of pissed off employees who agreed to take a high percentage of their salary in restricted stock units (RSUs).  At today’s current price, Bezos has paid out close to $500 million worth of RSUs at much higher stock prices.   Imagine thinking you are getting paid $100k but when you go to sell your stock, you find out that your salary during that time period was really $25k…My report explains these RSUs and shows why AMZN is the biggest Ponzi scheme in the modern era…

I’ve updated the AMAZON dot CON report and show what was in the numbers that triggered a $190 sell-off in the stock.  I’ve also updated the section of the report that outlines using calls and puts to short AMZN.

AWS will be one of the first cracks of the glacier but what will bring the whole thing down is when that RSU payment scheme unwinds itself.  Most analysts are overlooking one of the biggest accounting schemes at AMZN in the history of any large public company:  how they pay a good chunk of base salary in RSUs and walking through what that means. That is going to be a day of reckoning for the business school case studies.   – a contact of mine who is a former Silicon Valley insider that specialized in tech company accounting

My report details AMZN’s Restricted Stock Unit accounting scheme and the ramifications for this Ponzi compensation scheme when the stock engages in bona fide price discovery, i.e. tanks hard.  You can access this report here:  AMAZON dot CON

Another Huge Reason To Short AMZN – The Perfect Contra-Bill Miller Trade

First of all, regard this as a warning to get your cash out of any funds at Legg Mason that are touched by Bill Miller.  The last time Miller was this bullish on stocks and AMZN, the S&P 500 collapsed from 1550 to 700 in 17 months.

Miller bills himself as a “value” investor.  Yet, currently he has the pools of money he manages at Legg Mason 10% invested in AMZN.  This just in, Bill, any stock that trades at a 425x earnings, 2.5x sales and 19x book definitionally is not a value play.  Miller’s current highly disillusioned view on the stock market can be seen here:  LINK.

Bill Miller’s claim to fame was beating the S&P 500 11 years in a row – until 2008 hit.  He did this by making highly concentrated bets in the hot financial sector stocks, homebuilders and hot momentum stocks like AMZN.  Nothing complicated there – certainly nothing Miller should have been earning $10’s of millions in fees on – go to the Blackjack table with the hot shoe and bet everything in your pocket on every hand.  Of course, eventually the shoe turns ice cold and the dealer wipes you out, quickly.

Fast forward to February 2009 and Miller had one of the worst 10-year track records in the industry.  He should have been investigated and barred from the industry.  Instead, he’s back to his same old tricks with a 10% bet on AMZN.  His fund at Legg Mason is down 20% for the month of January.  By the end of the year, I predict that all of the gains he may have achieved over the last 5 years will be wiped out and his investors’ accounts will be incinerated.

If anyone wants to understand why Miller’s position in AMZN is the ultimate example of reckless money management devoid of proper due diligence, you can see the truth in detail in my Amazon dot Con report.   I’m working on the 4th quarter numbers and will soon have an update, which will be available to everyone who has bought the big report.

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The weekly issue of the Short Seller’s Journal has been released this afternoon.  This is my best issue yet and includes an options trading resource (emailed separately).  I have identified a short-sell idea that takes advantage of a highly leveraged company exposed to a highly cyclical industry and has significant exposure to subprime counterparty risk.   I also have a leveraged energy sector “Quick Hit” play to take advantage of what appears to be yet another rumor-driven short-squeeze move in the price of oil last week.

Finally, I have some preliminary comments for subscribers on AMZN’s earnings report.   Every quarter I seem to discover more problematic aspects to AMZN’s business model.  By the way, as predicted, the growth in its cloud computing sales – the so-called AWS buiness – are starting to show signs of slowing down.

Click here or on the image above to subscribe:  SHORT SELLER’S JOURNAL

Thanks for putting together an informative report with actionable ideas. For years I have stared in stunned disbelief as the rigged up, QE inflated stock market kept defying gravity but it looks like the chickens are coming home to roost now. With the ideas you provide, I hope I can take advantage of the coming downturn with some profitable trades.

They Don’t Bother To Hide The Criminality In Silver And AMZN Trading

When they’re trading 1.5 billion oz. of silver each day in London, the ‘silver’ fix each day is a complete sham. Now the fix has been found to be openly manipulated, it will be interesting to see what happens with the London silver market. – David Jensen, “Silver: Is It The LBMA’s Greatest Rig?”

Strange things are happening in the global financial markets.  Most likely evidence of a massive systemic earthquake starting to shake.  As many of you know, the LBMA price fix “fixed” the a.m. priceUntitled of silver 84 cents below the front-month futures price right before the price was “fixed.”   This graph to the right shows how the criminal activity went down (click to enlarge).

I awoke this morning and had an email from Bill “Midas” Murphy asking me if the $13.98 low print shown on Kitco was correct.  I responded that it looked like there were some “low hanging” stop loss orders that were attacked in an attempt to get the price of silver down.  This was before I had learned of the crime committed on the LBMA.

I would love to have an explanation from the committee in charge of overseeing the LBMA fix.  The fact that paper silver bounced back almost immediately is evidence that the a.m. fix was a fraudulent act in its entirety.  But for what purpose?  The price fix is supposed to be the price that balances out the amount of physical silver bars being offered for sale and bid to purchase during morning trading.

The entities selling silver on Thursday morning didn’t just get their faces ripped off, they had their entire head decapitated.  These are the entities who should be pressing for investigation.  It’s money out of their pocket or their clients’ pockets.

This was my final comment to Bill on this matter:   The insider elite are laughing at everyone spending so many calories and so much energy reporting, discussing, analyzing and agonizing over the paper vs. physical issue.  Meanwhile the biggest theft in history is taking place right under our nose as they pluck every ounce of physical gold and silver out of the system from the idiots and the idiotic mining companies who are willing to sell it at the paper price levels.  The biggest wealth transfer mechanism is the Central and bullion banks.  The banking system has been ripping us off in every aspect of our lives for decades. Why on EARTH would anyone question or doubt that they’re ripping us off in the precious metals market? Seriously. Everyone in their heart of hearts knows that gold/silver are the ultimate root of any monetary system.  Why would the banks rip us off using paper currency schemes and not touch the metal?  For God sakes, the metal is what they’re ultimately after.  That’s why the first thing any military does when they take over a country is it takes the gold.  The most recent proof of this Ukraine.  That practice goes back to at least the Romans.

Someone sent me an excerpt from Ted Butler’s “news” letter in which he rationalized away the reason why the registered gold vault account at the Comex was so low now.  Bill, I seriously think he was on LSD when he dreamed that one up.

I guess what’s most troubling about the above incident is the blatancy with which the LBMA crooks implemented their crime.  They made no attempt whatsoever to cover up the crime scene.  It’s almost like they’re taunting us.

This brings me to the issue of AMZN’s trading today.  AMZN stock ran up $52, or 8.9% ahead of its quarterly earnings to be released right after the NYSE close on extraordinary volume of 14 million shares – 2.4x more than its 10-day average daily volume.   After the market closed, AMZN’s stock plunged as much at $95 from the close on a disappointing report.  It closed out the after-hours session down $85.

I bring this up because there is no question in my mind that the stock was likely run up by one of the hedge funds with a big position in the stock (or possibly two or three in collusion).  The purpose of this would be to generate a frenzy of buy activity into which the hedge fund could unload a chunk of stock.  This also implies that one (or more) of the big funds was given a “heads up” from inside AMZN about the nature of the report.

The reason I am convinced this is what happened is because I was part of a junk bond trading operation in which this occurred all the time.  Back then we had to be more careful because laws were actually somewhat enforced, sometimes with vigor.  But if I had a big position in say, Trump Casino bonds,  occasionally I would get a tap on the shoulder from one of the Trump bankers in corporate finance who would whisper, “uh, I don’t like your Trump position.”

In present times, the laws and regulations designed to prevent/discourage insider trading are rarely, if ever, enforced.  Insider information sharing is almost as blatant as the London silver price fix today.   Of course, I have zero sympathy for any of the idiots who chased the stock higher today.  Anyone who goes near that stock without doing extensive analytic work will get what they deserve.  Some of these big hedge funds who have massive AMZN positions are eventually going to get impaled on their holdings (or at least the pensions they manage money for will).  Here’s an example of one of the retail trading oriented dopes who was giddy about AMZN stock before it reported – Timothy Collins of TheStreet.com’s Real Money:  I’m Bullish On AMZN Ahead Of Earnings.   Nice trade, Tim.

Speaking of AMZN’s numbers, I will hopefully get around to updating my AMAZON dot CON report with the latest information sometime in the next 5-7 days.  If you have already purchased the report, please email for the update.  If you have not yet purchased the report but have thought about it,  I am going to raise the price again (it takes a lot of time and energy to work on this Company’s numbers) once the full research report is published with the update.

Today’s after hours action was just the start of the AMZN bubble deflation process.  I don’t know what path it will take, but I know that AMZN’s stock will eventually fall from the $550 after hours close today toponzi_scheme below $100.   To be sure, there will be periods of time when the stock moves up sharply because Jeff Bezos is the king of highly misleading stock promotion and there’s plenty of idiots out there who lap up his drool with blind greed.  My stock report will help you understand why AMZN is one of the world’s greatest Ponzi schemes.

The Pre-Earnings Promote On AMZN Begins

It began last night with FB’s earnings release, which triggered a spike in both FB and AMZN stock after-hours:  LINK.  I have been very clear to the subscribers of my Short Seller’s Journal to avoid shorting AMZN ahead of its earnings release after the market today.  I also advised them to take profits on any short positions or put positions last week.   I have been on the record stating that I fully expect AMZN to report a blow-out quarter.  The trick is to understand how and where they are using GAAP/non-GAAP to inflate the net income and “free cash flow” numbers they will report.    AMZN continues to burn cash and will continue to burn cash.  That’s the bottom line.

Point in case is this puff-piece from Bloomberg News this a.m. which describes how AMZN generates revenues – yet it fails to describe how AMZN turns those sales in real net income and real cash flow.   FYI, AMZN states in the fine-print of its 10K/10Q filings that its reported “free cash flow” number is not a metric that conforms to Generally Accepted Accounting Principles – a fact that should not surprise anyone who does real research and analysis on AMZN.

FB/AMZN: Idiotic Retail Daytraders And Hedge Fund HFT Algos

Facebook reported it’s Q4 earnings today.  Its “NON-GAAP” earnings “beat” the consensus “NON-GAAP” estimates.   As it stands, “GAAP” accounting standards have become an outright joke.   The use of “NON-GAAP” reporting has transformed the entire accounting industry into an adult cartoon.  “Beavis an Butthead” for corporate earnings reports.

Why even report financials?  Why not just report NON-GAAP earnings per share?  Feed the ducks what they want to eat.  “NON-GAAP” translated into English means, “here’s our earnings if you exclude all the expenses we take every quarter that we consider to be non-recurring.”  It’s income not including recurring “non-recurring” expenses.  It’s an absolute unethical perversion of financial accounting – kiddie porn for Wall Street analysts and moronic institutional investors.

Based on today’s GAAP earnings and the after-market level of trading, FB trades at 78x trailing EPS, 16x revenues, and 36x cash flow (EBITDA).  This is an insane level of valuation for a company with sales derived primarily from mobile advertising.  I guess a fact that escapes most investors is that as the global economy sinks deeper into recession, the decline in consumer spending will accelerate and advertisers will cut way back on ad spending budgets.  I’ll let you figure out what that will mean for companies like FB that derive their revenues from corporate ad spending budgets.

Perhaps even more confounding is the fact that the stock of AMZN, which reports its Untitlednumbers tomorrow after the close, jumped $10 in after-hours when FB reported.  I’m not sure why online widget sales would be correlated with the growth rate of the number of people who log onto Facebook, but it exemplifies the degree which the U.S. stock market has become disconnected from economic reality. (click image to enlarge)

Having said that, making money by trading irrationalities in the stock market is a big part of what my Short Seller’s Journal is all about.  I deliver a weekly newsletter to your email with one long-term fundamental short-sell play and one or two “quick hit” trade ideas. The quick hit ideas are designed to take advantage of stocks which pop in price in absence of any true bona fide fundamental reasons.  The textbook example of this is Weight Watchers. Just today in fact, the idiots on financial news tv were reporting how a tweet by Oprah caused the stock to jump 23% to close at $13.75.

What they didn’t tell you is that she pulled the same stunt right after Christmas – only stock after that closed at $23.05.   I put this stock in my Short Seller’s Journal released on January 3 at $22.95/share.  Subscribers who took advantage of this idea and held until Friday that week made 34% on their short position.  The ones who played the puts I SubscriptonGraphicsuggested made 600%.

SSJ is a monthly subscription with four reports each week.  I include some fundamentals-based research, ideas for using puts and calls to replicate shorting a stock and capital management suggestions.

I am one of your new subscribers. I am a novice in Option trading field. I am just writing to let you know that I enjoy SSJournal and especially examples of how trading strategies could be executed, with actual described cases – to me that is the best way of learning. I think that is most valuable for me. Shorting companies symbols are, of course, very important to get one going in the right direction as well. – subscriber from Sparta, NJ

Is AMZN’s Genie Finally Out Of The Bottle?

A curious news report hit the tape yesterday which described a “major shift in [Amazon’s] thinking” – AMZN Buys Rights To “Wiener-Dog.”  I find it curious because,  a) the author of the report clearly has not read my Amazon dot Con stock research report and b) there has not been a “major shift” in AMZN’s “thinking.”  (click to enlarge image)

UntitledThis move by AMZN has been endemic to the way Jeff Bezos operates since he transitioned the Company from a simple-model online book-store into a gigantic Ponzi scheme which has fomented one of the most overvalued high profile stocks in history.  Oh by the way, he’s fleeced shareholders for 10’s of billions of dollars over the last 20 years.

This news report embodies the myth of Amazon.  Every time Bezos rolls out a new add-on to his business model, the AMZN stock bulls herald his genius and the stock goes nuts.  We’ve seen this countless times over the years including recently:  drone delivery, restaurant menu delivery, same-day delivery, cloud computing, content delivery…And yet, curiously, Bezos has never been able to deliver bona fide net income to his shareholders from his add-on Ponzi business ventures.

His true business model is selling dreams to AMZN perma-bull shareholders as a technique to trigger a stampede into the stock.  Heck AMZN stock jumped when Bezos announced hisponzi_scheme personal venture to develop a space travel company.

But perhaps the market is finally catching on.  AMZN stock is down 2.5% today as I write this. I suspect the market may see the through the  transparency of  his latest “major shift in thinking.” He spent a few million dollars of shareholder money on a movie called “Weiner Dog” that was thoroughly panned by critics.   One might think a few million spent is a meaningless amount to a company with at $285 billion market cap.  The problem is that the “money spent” in recent years is being funded with junk bonds.

This is how Bezos has been operating over the last 20 years.  Spending money thrown at him by the stock market into business ventures that lose money and burn cash.  My Amazon dot Con report lays this out in detail.  The truth is that, over the last 20 years, Bezos has become one of the richest men in the world and AMZN stock recently hit a market valuation of $325 billion.  And yet Bezos has only been able to delivery $1.9 billion in net income cumulatively to shareholders over the last 20 years.

Amazon.com: Has The Bubble Finally Popped?

It’s good to no longer be a lone voice in the wilderness.  This latest commentary on the insane overvaluation of Amazon stock comes from Bill Bonner of Agora Research by way of the Acting Man blog:

Every AMZN bear has been made to look like an idiot – but that may soon change. As David Stockman recently pointed out, those who actually take the time to properly analyze its slippery accounting and business model (not the dead fish employed by the sell-side, obviously) cannot help but conclude that it is a giant Ponzi scheme – and the danger that this realization will penetrate the “market mind” is increasing. It remains a “river of no returns” – although consumers have every reason to love it. Investors buying it today pay 830 times net earnings for the stock – and said net earnings actually look somewhat dubious upon closer inspection.

Interestingly, a lot of AMZN critics still insist on describing AMZN as company that generates “cash flow.”  But, as my AMAZON dot CON report details, the metric being describe as “cash flow” comes from Bezos’ own quarterly earnings presentations in which he references “free cash flow.”

For those of us who bother to scour the footnotes of AMZN’s SEC filings, we find that AMZN discloses that its “free cash flow” metric does not conform to GAAP accounting standards. But I take that disclosure in my report and show, with details from AMZN’s financials, why the term “free” in reference to “cash flow” is highly misleading.  In fact, over the last two years the cash used by AMZN to “invest” in its business model has come largely from debt issuance and from gift card and Prime membership deposits.

Amazon Prime?  Bezos admitted about a year ago that Prime loses a couple billion, a fact confirmed by one analyst in July but ignored by everyone:  LINK.  The idea behind Bezos’ strategy is to do whatever it takes to generate sales growth.  The stock price soars when it looks like AMZN is growing rapidly.   However, as my report details with direct evidence from the financials, revenue growth is required in order for AMZN to pay its expenses.  In other words, the only way AMZN stays afloat is if “cash in” exceeds “cash out.”  That’s the definition of a Ponzi scheme.  AND, as a matter of fact, as I show in my report, AMZN has stretched out its accounts payables over the last few years.  This is a trick companies use in order to slow down the rate at which they pay their bills.  If revenues begin to decline, AMZN will hit the wall – quickly.

As I state in the introduction sent to new subscribers of my Short Seller’s Journal, it is impossible to time the top in AMZN.  But once it rolls over, it will drop quickly.   You might miss the move from $600 to $400, you can ride it from $400 to $100 or lower.  AMZN ran from $300 to almost $700 in less than a year.  It can easily complete that roundtrip in even less time.

There’s probably a core level of operations that can be a profitable business. But it is nowhere near the level that generates the current $100 billion of revenue.  AMZN spends at least $1 to generate every $1 of revenue.  That core level of potential profitability would likely imply a fundamental value per share well below $50.

I would not necessarily rush out and short AMZN right now.  It will probably start to move higher into its earnings report on January 28 (after the market close).  I have a feeling that Bezos will pull out all the stops to manufacture an earnings report that beats consensus estimates and the stock will gap up again as all the hedge funds that piled in short this week scramble to cover.  THAT is when you want to start pulling the trigger on shorting the stock.  My AMAZON dot CON report will help you prepare for that.

More On The Amazon Spin-Machine

Jeff Bezos’ greatest business trick is his ability to spin the illusion that AMZN is a money-making machine.  In fact, AMZN is remarkable  sales-generating machine,but it costs the Company more than a dollar to generate a dollar of sales.Bezos1

All of a sudden in 2015 AMZN had become a cloud computing services phenomenon.  The last two earnings report showed a rate of growth in its AWS business and the stock rocketed higher.  Of course no one seemed to care that outright the AWS business represents less than 10% of AMZN’s total revenues.  And of course nothing is ever mentioned about the quality of AMZN’s AWS-derived sales.

The truth is, and Bezos never discusses this, that the majority of AMZN’s AWS contract revenue comes from Silicon Valley unicorns.  Most, and maybe all, of them will not be around in a few years.  Here’s an accounting of this from someone besides me:

I would like to introduce a meme before the sell side or buy side catches on.  As you know AMZN was up 100% this year as Bezos revealed the AWS business to the world.  The meme is this: AWS growth is unsustainable.  Not only is it unsustainable I predict that the sell side forward revenue growth rate for AWS will  go to zero or negative by Christmas next year.   It has come to my attention that 50% of AWS growth comes from start ups and my guess is that the majority of those dollars are Unicorns.  AMZN has been an indirect beneficiary of QE largess.  The Fed’s easy money created a bubble in VC funded start ups.  That funding peaked this year and is now in decline as the Unicorn bubble is bursting.  I expect this bubble to unravel fast as we are in the part of the cycle where the capital markets shut down for companies burning cash.  –  AMZN:  The Ghost Of XMAS Yet To Come

My AMAZON dot CON report goes into further detail about the problems with Amazon’s AWS business modelAMZNnew and why, at some point, the market value being assigned to the part of AMZN’s business model will likely largely evaporate this year.