• Introduction: Anecdotes about the “Amazon Apocalypse”
  • The Rise, Fall, Resurrection and Failure Rates of Retail & Other Firms
  • The Batting Averages and Payoff Structures of Retail Pre and Post Amazon
  • Where Kailash’s Models Stand on Retail
  • Exhibits

Introduction: Anecdotes about the “Amazon Apocalypse”

Like many of our partners who subscribe to this product we have been known to read various magazines, newspapers and sundry other forms of media. One of the things we have noticed over the last year or so has been the rise of highly opinionated articles about Amazon. They can be exciting reads and their titles offer insights into the topic the writers intend to review. Below, and in no particular order, is a list of 10 titles of articles Kailash Capital has read over the last several months:

1. JEFF BEZOS WILL CRUSH YOU, How The Rise Of Amazon Has Destroyed Retail Chains, In One Charti
2. Competing with Amazon is crushing retailersii
3. Here are the consumer industries Amazon will crush nextiii
4. Why Amazon crushes Walmart in paid search for consumer electronicsiv
5. The cutthroat jobs strategy Amazon uses to conquer retailv
6. Proof that Amazon has ravaged the retail industryvi
7. Amazon is Completely Destroying These Iconic Storesvii
8. Amazon Just Revealed How It’s Planning to Destroy All Grocery Storesviii
9. Amazon’s Retail Trade War Is Bad News For Neighborhood Stores and Minimum Wage Workersix
10. Amazon is going to kill more American jobs than China didx

Considering all the crushing, ravaging, and killing that is being reported Kailash Capital finds itself relieved that all this violence is occurring in a contained commercial sphere. Reviewing the articles however, it is remarkable that a business largely made famous selling goods to Americans could be so successful while the media constructs a narrative about the firm that one might easily confuse with that of Genghis Khan or Attila the Hun. While there are plenty of more cheerful articles with names like “3 Retail Stocks That Amazon Won’t Crush” and “Amazon May Not Kill Big-Box Retail After All” our anecdotal observation is that there may be a consensus that the rise of Amazon has not been great for its competitors.

Looking at Figs. 1 and 2 below we believe the market has validated our anecdotal observation and taken the above media narrative to heart. Over the last one, two and three years, investors have awarded Amazon with remarkable levels of outperformance while punishing the rest of the retail sector severely. While a little difficult to see due to the scaling issues on the chart, retailers excluding Amazon have underperformed by nearly 20% and 50% in our S&P500 and Small & Mid Cap universes respectively.

icons8 vertical line 50
icons8 lock 50

  1. As a reminder for our Financial Advisors: our models are available on a continuous basis, and most have been in production for over a decade.  If you are looking for simple, concentrated, low turnover, and tax efficient model portfolios we would like to talk with you.  KCR also offers a wide range of easy-to-use but sophisticated tools.  Our toolkits can help identify mispriced stocks with the best and worst risk/reward characteristics, estimate a stock’s duration and warn you when a company is engaging in low-quality accounting. Over the last 12 years, KCR has built and offers time-tested and class-leading products built by experienced and proven money managers for fixed to low prices.
  2. Kailash Capital’s sister company, L2 Asset Management, runs market neutral, long/short, large-cap, and mid-cap long-only portfolios with a value and quality bias.  L2 employs a highly disciplined investment process characterized by moderate concentration, low turnover, high tax efficiency, and low fees. While nobody can predict the future, we believe the recent resurgence in risk-adjusted returns seen across all products is the beginning of what may be a long period where speculation is punished, and prudence and patience rewarded.

Disclaimer

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.

March 15, 2018 |

Categories: White Papers

March 15, 2018

Categories: White Papers

Share This Story, Choose Your Platform!