Don't look now but the
has the first serious discussion of the Internet I've come across. You simply have to read this
led-discussion of the Net, because, for the first time, it is not simply a discussion of mania vs. momentum.
I have long been enamored of Samberg, ever since I met him at a hedge-fund dinner hosted by
Morgan Stanley Dean Witter's
Byron Wien and he was self-effacing about his stock-picking. You see, you can always tell the best stock picker in the room; he's the guy with the most humility and the least hype. (Full disclosure: Samberg's firm has an investment in
.) Not only that, but Samberg didn't diss my idea of getting long some disk-drive stocks, while everybody else seemed to roll their eyes in pain.
What caught my eye specifically was that only Samberg seems to have some history and a context about what works and what doesn't about the Net. He is not cynical or dismissive of all the companies. He is not blinded by its greatness. And in his interview, which I found wishing was in
and not Barron's, I found this gem:
We've been big fans of Amazon (AMZN) - Get Amazon.com Inc. Report -- I own Amazon. At last an admission by somebody to owning the greatest-performing stock of last year. But I was disappointed that they didn't show a bit more progress last quarter in bringing it to the bottom line. Gradually people are going to focus on...
Of course he then got interrupted by someone on the panel who asked whether Amazon basically sells books. Hello, hello, come in, please? Hello?
But he was right on track with the billion-dollar, and I mean literally billion-dollar: "The investment question about Amazon is all about whether they can get enough gross margin." He then poses another question about how successful Amazon will be branching out to other businesses...
And then he delivers the killer answer to what is going on: "But I don't want to talk about the price today because nobody can defend what's going on on a daily basis. The only day these stocks have ever gone down is when
had a computer outage one morning and they all went down 20%. I mean there is nobody in this room who owns the Internet stocks except for me, I guess. There are very few institutions that own these things."
Right there is everything you need to know about the Net. It is dominated by the
overnight traders who trade through Knight. They have kept the stocks in the air because they are all thin. Now real venture-capital sellers are selling the stocks and these Knights don't have enough money to keep them in the air. Institutions are looking at them, but institutions need to have that gross-margin question answered before they buy.
And, just as the institutions are trying to figure it out, Samberg notes that
is worried about Amazon making money. The halo, the money-losing halo, is going away. If Amazon is to be a big stock it needs to show to things loud and clear: It needs to keep the revenue growth ahead of plan and it must, right now, this very instant, begin to stem the losses, begin to show us how profitable it can be. If it continues to show big losses, or even bigger losses than the Street is looking for, this stock is history, because the Sambergs are the world are going to blow them to kingdom come. That's what this interview is telling you. This interview is the key to the Net and if you try to trade without it, you too, will be history.
Thanks, Art. And thanks, Barron's. That's two weeks in a row this magazine has made me smile. Must be a new sheriff in town.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. At the time of publication, the fund had no positions in stocks mentioned in this column, though positions can change at any time. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to TheStreet.com at