Highlights

Good Articles to Share

Author: Tan KW   |   Latest post: Sat, 19 Jan 2019, 03:43 PM

 

Investors ask how the Bezos divorce will affect Amazon

Author:   |    Publish date:


NEW YORK: Amazon.com Inc shares seesawed on Jan 10 as investors questioned how the impending divorce of company founder Jeff Bezos would affect his control of the most valuable company on Wall Street and its ambitious expansion plans. 
 
Bezos, whom Forbes lists as the world's richest person, worth an estimated US$136.2bil, said via Twitter on Jan 9 that he and his wife of 25 years, MacKenzie, will divorce. Amazon shares were down 0.5% in afternoon trading on Jan 10, after gaining earlier in the session. 
 
The split throws into question how the couple will split their fortune, which includes an approximately 16% ownership stake in Amazon's roughly US$811.4bil market capitalisation. Divorce laws in Washington state, where they live, hold that property acquired during a marriage is generally divided equally between spouses. 
 
Most analysts and fund managers are largely sanguine and say the divorce will not lead to any significant change in the company's leadership or its growth prospects. 
 
Prominent short-seller Doug Kass, however, who runs hedge fund Seabreeze Partners, said he sold his stake in Amazon on news of the divorce. That was after initially buying a stake in late December and naming Amazon among his “best ideas list”. 
 
“Is it premature to ask what happens to Amazon when Jeff Bezos chooses to turn over the day-to-day running of the company he founded?” he said. “His announced divorce gives me pause for thought.” 
 
The couple has multiple residences across the country, so there is a possibility the divorce could be filed in a state where marital property is not presumed to be divided equally. 
 
New York matrimonial lawyer Bernard Clair said in that case a judge would likely determine MacKenzie Bezos' share of Amazon stock based on her contribution to her husband's success, which could include helping him make important business decisions or raising their children so he could focus on work. 
 
Any transfer of Jeff Bezos' stock would be subject to US Securities and Exchange Commission disclosure requirements. As an officer and director at the company, Bezos could be required to file an SEC Form 4 within two business days of any transfer, though former SEC lawyer Broc Romanek noted a provision of US securities laws exempts share transfers made pursuant to a domestic relations order. 
 
Even if Bezos were exempted from filing a Form 4, he would be required to update promptly the record of his Amazon holdings on file with the SEC if his position in the company changed by 1% or more, said D.C. securities lawyer Thomas Gorman. MacKenzie Bezos would also need to file a similar record if she received more than 5% of Amazon stock. 
 
Peter Henning, a securities law professor at Wayne State University, noted that Amazon, unlike fellow tech giants Facebook Inc and Google Inc, does not give its founder's shares greater voting rights. If MacKenzie Bezos is given a large block of shares, she could have a big say at the company. 
 
Gorman agreed. “She could wind up with some sort of control block, and get herself a directorship,” he said. “It depends on what she wants to do.” 
 
Any effort to dilute MacKenzie Bezos' voting rights by creating a separate class of shares would require a shareholder vote, said Gorman, though he added that he thought such a move unlikely. 
 
“Nobody wants to run their divorce through a shareholder meeting,” he said. 
 
Robert Bacarella, portfolio manager of the Monetta fund, said that while he is not changing his investment in Amazon, he expects other growth-focused portfolio managers may trim their stakes due to concerns about the divorce's impact. 
 
“This is such an over-owned company and this gives them an excuse to say 'Maybe I'll trim some back because it adds a new question mark',” he said. 
 
Bacarella, however, said he is not concerned because even if MacKenzie Bezos liquidated a stake that could be as high as 8%, there would be no fundamental reason behind the sale. Any impact would be short-term in nature. 
 
“Unless you worry that he will get so distracted by the divorce that he cannot manage the company, this will be a non-event,” said Michael Pachter, an analyst at Wedbush Securities in Los Angeles. “He is given control of the company because shareholders like him and his vision, not because he has 50% of the stock.” 
 
Thomas Forte, an analyst at D.A. Davidson, said questions about the future of the company due to the divorce are legitimate due to Jeff Bezos' outsized influence on its value. Should he leave the company for any reason, its shares would likely immediately fall more than 10%, he said. 
 
“His influence on the company is as a significant as if he had super-voting shares because of his track record and the way he runs the company as if he owned the whole thing,” he said. – Reuters  
Share this

  Be the first to like this.
 


 

402  326  492  672 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 ARMADA 0.22+0.06 
 SAPNRG 0.285-0.005 
 SUMATEC 0.005-0.01 
 MYEG 1.01-0.06 
 BARAKAH 0.08+0.02 
 NEXGRAM 0.020.00 
 IRIS 0.15+0.005 
 XINGHE 0.045+0.005 
 KNM 0.09+0.01 
 ECONBHD 0.515+0.045 

TOP ARTICLES

1. 当遇上基本面投资法(下) 能赚钱就是好战略/冷眼 【冷眼专栏】漫漫投资路
2. 当遇上基本面投资法(上) “反向”战略非唱反调/冷眼 【冷眼专栏】漫漫投资路
3. Fear on Bumi Armada is probably overdone - felicity Good Articles to Share
4. THE PERCEPTION OF P/E or: How I learned to fear my Wife the bursa journey that worked for me. 2000-2019
5. Stocks on Radar - Elsoft Research (0090) AmInvest Research Reports
6. FPI FY19 revenue growth expected to hit 15% FPI 2大因素前景看好台灣聯友今年再 尋突破
7. Is QL Resources worth investing now? kcchongnz kcchongnz blog
8. [转贴]《东方华尔街》告诉你,炒家如何炒高一只股 Good Articles to Share
Partners & Brokers