• Introduction: Keeping it Simple
  • A Bankable Year: How Much “Free” is in Free Cash Flow?
  • The Lost Impact of Large Numbers: What does $26.666 Billion Mean?
  • Conclusion: The Munificence of Growth Focused Markets

Introduction: Keeping it Simple

A year ago Kailash wrote The Amazon Apocalypse Part I & Part 2 examining the growing disparity of implied expectations expressed in the market valuations ascribed to Amazon compared to all other retailers. The papers referenced a raft of media articles that made visceral use of words like “crushing…ravaging…[and] killing” when describing Amazon’s impact on old-fashioned retailers. Kailash’s anecdotal observation then was that “there may be a consensus that the rise of Amazon has not been great for its competitors.” We will provide a full update on that report later this month.

In perusing Amazon’s 10-K your author found himself dabbling in the firm’s footnotes. None of us at Kailash profess any expertise around the Amazon story.1 Our interest in the organization resides merely in the equity’s stunning advance. Since the market trough on March 9, 2009 through the end of April 2019, Amazon has risen an astounding 3,085% vs. the S&P 500 and Russell 1000s’ 438% and 444% respective increases. With a market cap just shy of a trillion dollars and a long history of accepting negligible profits in search of top-line growth, Amazon cannot help but inspire wonder.

Figure 1 below shows a mere six rows of data from Amazon’s 10-Ks. Kailash believes it is the first three rows that have captured the hearts and minds of investors. Since 2014 Amazon has grown sales 162%, swinging from negative net income to a $10bn profit while free cash flow exploded to $19.4bn or an 895% increase. These first three rows show seemingly incontrovertible evidence of fantastic incremental operating and cash margins accruing to a revenue juggernaut.


The information, data, analyses, and opinions presented herein (a) do not constitute investment advice, (b) are provided solely for informational purposes and therefore are not, individually or collectively, an offer to buy or sell a security, (c) are not warranted to be correct, complete or accurate, and (d) are subject to change without notice. Kailash Capital, LLC and its affiliates (collectively, “Kailash Capital”) shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information herein may not be reproduced or retransmitted in any manner without the prior written consent of Kailash Capital. In preparing the information, data, analyses, and opinions presented herein, Kailash Capital has obtained data, statistics, and information from sources it believes to be reliable. Kailash Capital, however, does not perform an audit or seeks independent verification of any of the data, statistics, and information it receives. Kailash Capital and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your tax, legal, and accounting advisors before engaging in any transaction. © 2021 Kailash Capital, LLC – All rights reserved.

Nothing herein shall limit or restrict the right of affiliates of Kailash Capital, LLC to perform investment management or advisory services for any other persons or entities. Furthermore, nothing herein shall limit or restrict affiliates of Kailash Capital, LLC from buying, selling or trading securities or other investments for their own accounts or for the accounts of their clients. Affiliates of Kailash Capital, LLC may at any time have, acquire, increase, decrease or dispose of the securities or other investments referenced in this publication. Kailash Capital, LLC shall have no obligation to recommend securities or investments in this publication as result of its affiliates’ investment activities for their own accounts or for the accounts of their clients.