A LONG-TIME INVESTOR has been steadily reducing its stake in Amazon.com, even as the online retail giant enters its seasonally strong fourth-quarter.
Over the past three quarters, Trust Company of the West, or TCW, has slashed its stake in Amazon to 24.3 million shares, or 5.8%, from an 11% stake at the end of last year, according to a Securities and Exchange Commission filing Tuesday.
TCW, based in Los Angeles Calif., manages more than $53 billion in assets on behalf of institutions, endowments, foundations and high net worth individuals, according to StreetSight.net.
The firm held nearly 31.3 million Amazon shares at the end of the first calendar quarter (March 31) and 26.97 million shares at the end of the second quarter (June 30).
Amazon has been buying back stock, but StreetSight.net calculates the first and second quarter stakes at 7.5% and 6.4%, respectively.
This year, the stock fell from a two-year high of $50 last December to a four-year low of $25.76 on Aug. 11. Shares closed Friday at $33.32.
TCW declined to comment. Amazon did not return a call seeking comment by deadline.
Certainly the selling has slowed down as Amazon shares continued to slip and TCW still owns a large amount of Amazon shares.
However, Ben Silverman, director of research at InsiderScore.com, says, "When you have big money investors like TCW moving out of a stock or decreasing its exposure to the stock, it's certainly something to take notice of."
While firms like TCW will actively buy and sell shares, he adds, "this is the first time they have sold the stock for three consecutive quarters since 2001."
In late 2001, Amazon "was struggling for profitability, the bubble had burst and the valuation was totally out of whack," says Silverman. Now there is more concern about competitors eating away the Internet retailer's presence, such as with "big-box retailers expanding their online presence," he adds.
TCW reported it had a stake in Amazon of less than 1% of the online retailer's total shares from early 1999 through much of 2002. It crossed the 5% ownership threshold in the first quarter of 2003 and regularly built its stake up since then.
The bulk of these purchases took place as Amazon shares rallied from 2002 to 2004. The stock bottomed out at around $6 in late 2001. As such, Jonathan Moreland, director of research at InsiderInsights.com, says TCW has "done extremely well and it looks as though they are taking home their marble and plan on playing elsewhere."
"They can definitely declare victory and go home at this point given their past transactions," he adds.
Overall, though, Joshua Hong, director of research at OwnershipAnalyzer.com, says the institutional picture looks "neutral," with selling by shareholders such as TCW offset by others' purchases.
For instance, Legg Mason Value Trust has "increased its ownership stake for eight consecutive quarters," notes InsiderScore.com's Silverman.
The $18.7 billion Legg Mason fund is run by Bill Miller, who is known for beating the Standard & Poor's 500 stock index for the past 15 straight calendar years.
Legg Mason is Amazon's second largest shareholder, with an 18% stake (75.9 million shares) at the end of June. Amazon's founder, Jeffrey Bezos, holds a 24.2% stake. According to StreetSight.net, Amazon is also Legg Mason's second largest holding, valued at $2.9 billion, after Sprint Nextel.
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