Klarman’s Gambit: From Alphabet’s Zenith to Amazon’s Potential

Old Man Buffett’s echo, Charlie Munger, used to say – and one suspects with a twinkle – that the best investment ideas aren’t discovered, but observed. Like watching a particularly shrewd pigeon locate a dropped crust. Seth Klarman, a fellow traveler in the realm of value, appears to be practicing just such observation. He’s a man who edits textbooks for fun, which is either a charming eccentricity or a subtle form of power. One suspects the latter.

Klarman, you see, runs Baupost Group, a private investment partnership. A secretive concern, naturally. Transparency is so dreadfully…common. And, like any diligent student of Benjamin Graham – that austere prophet of value – he files his Form 13-F with the SEC. A bureaucratic ritual, of course, but a useful one for those of us inclined to peek behind the curtain. The latest filing reveals a curious shift: a retreat from Alphabet and a bold advance toward Amazon. A change of scenery, if you will.

The Artful Dodge from Google’s Ascendancy

Klarman initially dipped his toe into Alphabet during the pandemic’s peculiar dance. A sensible move, one might think. A dominant company with a cash flow that could rival a small nation. He then doubled down when the AI chatter threatened to unsettle Google’s throne. A contrarian impulse, admirable in its audacity. However, even the most astute gambler knows when to fold. And fold he did, trimming his Alphabet holdings as the stock began its improbable ascent. A man doesn’t sell at the peak, my friend, unless he has a very good reason – or a better opportunity.

The market, it seems, had grown overly enthusiastic. Alphabet, after years of reasonable valuation, suddenly began to resemble a hot air balloon. The antitrust concerns eased (a testament to the persuasive power of legal counsel, no doubt), Gemini emerged as a contender in the AI arena, Search revenue ticked upwards, and the cloud business showed a glimmer of promise. Even the AI accelerator chips found a willing buyer in Anthropic, ordering enough to power a small city. The stock’s P/E ratio climbed from a modest 20 to a rather giddy 30. Klarman, a man who appreciates a bargain, wisely decided to take some chips off the table. He still held a significant stake, mind you, but the largest position? No. That honor was about to be bestowed elsewhere.

Thus, a sizable sum was liberated from Alphabet and redirected. Not into a Swiss bank account, one hopes, but into another promising venture. A venture with a slightly less…exuberant valuation.

A Calculated Risk on the Amazonian Frontier

Klarman, it appears, has been casting a covetous eye toward Amazon for some time. Baupost has dabbled in Amazon before, but this latest investment is of a different magnitude. Nearly half a billion dollars poured into the company, making it the second-largest holding in the portfolio. A clear signal of conviction. A declaration of intent. A rather substantial wager, really.

While Alphabet was soaring, Amazon was…merely ascending. A mere 5% gain for the year, while the market celebrated elsewhere. The cloud business, it’s true, had slowed, and whispers of lost momentum circulated. But Klarman, a seasoned observer of the market’s follies, likely saw an opportunity where others saw only stagnation. Amazon, after all, is the undisputed king of cloud computing, growing its business from a much larger base than its competitors. A giant, perhaps moving a little slower, but still a giant.

He may have sensed the market’s pessimism as a temporary affliction, a fleeting moment of irrationality. Shares trailing the overall market gains, the valuation looked…attractive. A bargain, even.

Amazon Web Services, it seems, is showing signs of acceleration, with plans to increase spending to meet the growing demand for AI services. AWS revenue grew a respectable 24% year-over-year. Analysts predict a surge in earnings per share in 2027. Of course, this growth requires investment – a hefty $200 billion in capital expenditures planned for 2026. But long-term investors, those with a touch of patience and a healthy disregard for short-term fluctuations, may find this an acceptable price to pay.

The stock, conveniently, has dipped below its fourth-quarter price, presenting a favorable entry point. With the potential for 20% earnings growth in 2027 and beyond, a 22 times earnings multiple looks…tempting. It’s not too late, my friends, to adopt Klarman’s investment idea and add a touch of Amazonian adventure to your portfolio. After all, a shrewd investor doesn’t follow the herd. He observes, calculates, and occasionally, takes a calculated risk. And sometimes, just sometimes, he wins.

2026-02-23 06:32

The Artful Dodge from Google’s Ascendancy

A Calculated Risk on the Amazonian Frontier

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