Big Buys of Amazon, GE, Walmart Stock

Amazon.com has revealed 20 finalist cities that it will choose from as a home for a second headquarters.

“We expect to invest over $5 billion in construction and grow this second headquarters to include as many as 50,000 high-paying jobs – it will be a full equal to our current campus in Seattle,” Amazon (ticker: AMZN) declares. “In addition to Amazon’s direct hiring and investment, construction and ongoing operation of Amazon HQ2 is expected to create tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community.”

No wonder the finalists want Amazon to come. The retail behemoth is publicly seeking business-friendly environments and incentive programs.

If Amazon truly wants “to find a city that is excited to work with us,” perhaps it should give special attention to finalist Nashville, Tennessee’s capital, considering that the state treasury lifted its Amazon investment by 33% in the fourth quarter. The state also bought more shares of Walmart (WMT) and General Electric (GE) while trimming back on positions in AT&T (T) and Gilead Sciences (GILD). The Tennessee Department of Treasury manages all of the state’s investments, including its pension fund. At the end of 2017 it overall managed $22.4 billion in U.S.-traded equities.

The state bought nearly 84,000 more Amazon shares in the fourth quarter, ending the year with 338,240 shares. The company’s stock rocketed 56% in 2017, and has tacked on another 18% in 2018 through midday Monday trading. If Amazon offers investors the whole package, the company wants to deliver it, as well, taking on United Parcel Service (UPS) and FedEx (FDX).

Unlike many other non-Amazon retailers, Walmart has held firm against that company. The stock has, as well; Walmart shares rose 47%, excluding dividends, in 2017, and have eked out a gain of another 1.2% in the year-to-date. Tennessee bought 593,400 additional Walmart shares in the fourth quarter and ended the year with 2.2 million shares. We remain bullish on the stock and expect a dividend hike later this month.

What is there left to say about GE? That there doesn’t seem to be a bottom? That regulators are examining GE’s ledgers? Our colleagues at MarketWatch have already called for Amazon to replace it as a component of the Dow Jones Industrial Average. GE shares have slipped 15% year-to-date on top of 2017’s 50% collapse. Tennessee bought 466,200 more GE shares in the fourth quarter, ending the year with 4.2 million shares.

Gilead has recovered, rising nearly 13% so far in 2018 after a shaky 2017 that saw it manage to squeeze out a gain of 3%. What’s the difference now? We noted that one analyst upgraded Gilead to Outperform, and sees the company’s other drugs picking up the slack from the stabilizing hepatitis C business. Tennessee slashed its holdings by 646,700 shares in the fourth quarter, ending 2017 with 338,000 shares.

The state also cut its holdings of AT&T by about a quarter million shares to end the year with 2.7 million shares. The stock didn’t ring up much in the way of gains in 2017, slumping 4%, excluding dividends, and it’s still not managing to connect with investors judging by the 5.2% slide so far this year.

Tennessee’s state gem is the Tennessee River Pearl, made by mussels. “Pearling” was once a popular pastime. The state hopes to net more treasures should the Amazon choose to flow through it.

Follow @BarronsEdLin

Comments? E-mail us at editors@barrons.com

Let's block ads! (Why?)