The $1 Trillion Pair Trade* - ADDENDUM
* I did say this isn't Clickbait!
Back in February, we introduced our “$1 Trillion Pair Trade”, a trade that is so big and liquid that even Norges could put it on in size.
The trade was long Amazon (ticker: AMZN) and short Walmart (ticker: WMT).
The thesis was quite simple:
Amazon traded down to below 30x P/E while Walmart traded at … 50x P/E!
At the same time, AMZN’s revenue growth is +12% per year, compared to WMT’s +5% revenue growth.
i.e. AMZN trades at a substantial 40% discount to WMT while growing faster, and that’s without even mentioning the “sprinkle” of AI & Anthropic.
At the same time, Walmart hit a “Meme Top” moment as THREE of the members of the Walton family entered the Top 10 Rich List.
The pair trade has since returned close to +20%…
…which isn’t bad for a market-neutral, trillion dollar trade!
In fact, these are the trades that pod monkeys salivate for, since they can put them in size while keeping their risk managers happy!
Here’s the funny part:
The performance of the trade was entirely thanks to the +23% rally in AMZN!
Walmart at 50x P/E?! No sweat! Deep value territory!
…which proves the point for the gazillionth time that the Market is as unpredictable as my 4-year-old and will do whatever she wants, whether you like it or not!
In any case, I’m out of this trade and gave thanks.
I’m thinking more about these relative value trades, as we discussed in “Easter Bunny Special”, though I should’ve renamed the piece to “Pod Monkey Special” and charged 2/20 for it 🤭
