Here are Doug Kass' top thoughts on some of the biggest stories of the week.


Going Even Bigger in Wells Fargo and Allergan

I am adding further to Wells Fargo ( WFC - Get Report) -- now very large -- and to my large holding in Allergan ( AGN - Get Report) , which finally is trading a bit better.
 
The markets are bouncing around the flat line Thursday, and given the season I suspect trading activity will slow to a crawl as we move to close out the week.
 
Position: Long WFC, AGN (both large).
 
Originally published Aug. 24 at 10:50 a.m. EDT
All Good Things Must Come to an End, Even for Amazon
 
Originally published Aug. 24 at 7:25 a.m. EDT

In "Finding the Flaws in Amazon," Jim "El Capitan" Cramer outlines a number of fundamental threats to the existing business landscape and share price of Amazon.com Inc. (AMZN - Get Report) . Among them:

* A weak recent earnings release by Amazon.

* The prospects for disappointing earnings reports ahead in the face of the expensive integration of the Whole Foods Market Inc. (WFM) acquisition and its implicitly low profit margins.

* Amazon is in a spend mode over the next one to two years.

* A new and threatening alliance between Walmart Stores Inc. (WMT - Get Report) and Alphabet Inc. (GOOGL - Get Report) with a home device that could compete against AMZN's Alexa.

* Possible demands made by Walmart to restrict business (e.g., cloud services) away from Amazon.

* Recognition by Home Depot Inc. (HD - Get Report) and others such as Macy's Inc. (M - Get Report) , Lowe's Cos. (LOW - Get Report) , PVH Corp. (PVH - Get Report) and Nike Inc. (NKE - Get Report) that a strategy against Amazon is incumbent and essential.

* Low-cost competitors such as TJX Cos. (TJX - Get Report) and Ross Stores Inc. (ROST - Get Report) .

* Alibaba Group Holdings Ltd. (BABA - Get Report) may "box out" Amazon in China.

* Amazon's chart is unsound, and its technicals are weak.

All of these solid issues presented by Jim, many of which I have brought up in my Diary, represent headwinds to Amazon's share price.

But, respectfully, my view is that Jim missed the biggest risk of all -- the existential risk presented by the Trump administration and by antitrust authorities that could derail both vertical and horizontal growth for Amazon. Here is my more complete analysis of Amazon that forms my bearish intermediate-term view.

Don't Cry Because It's Over, Smile Because It Happened

I placed Amazon on my Best Ideas List on July 12 at $1,007.75. It was during Amazon's "salad days" -- a time in which FANG was riding high. This was a period in which Amazon was at heightened popularity; there were few naysayers. Certainly Wall Street's sell side and growth/momentum investors fully had embraced the shares.

It seemed, back then, that not a bad word was uttered about the company.

I averaged up on the short (as I do typically) as the shares gravitated to a new high toward $1,070 (raising my cost basis to about $1,045-1,050) and covered for a nice profit my stock on the company's disappointing quarterly release at about $1,005. As the shares rebounded back to $1,020-$1,030 I re-established my short. I recently reduced my short in the $955-$970 area.

All good, thus far.

The shares closed yesterday at $958.

I expect the shares to continue to trend lower in the fullness of time.

Position: Short AMZN small.
 
Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings. This week he blogged on::
  • How he's pressing some shorts.
  • How he's gone cold for Campbell Soup.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long AGN, GOOGL and TJX.