CHAPTERS
Amazon as a lens on value vs. growth investing
Ben Gilbert frames Amazon as a timely example—both because of Acquired’s recent focus and because it appears in Howard Marks’ memo. The discussion sets up the broader question of whether “value” and “growth” are truly distinct categories or often intertwined.
Buffett’s “business over management” idea—and Amazon as the counterexample
Andrew Marks contrasts traditional value investing—focused on business fundamentals—with the Buffett aphorism that you want a business “an idiot can run.” Amazon challenges that view because much of its ultimate value came from exceptional leadership and strategic evolution.
The AWS surprise: betting on founder-led optionality
Andrew argues that early Amazon shareholders couldn’t have “dreamed of AWS” when Amazon looked like a retailer. This is presented as proof that backing an outstanding founder can unlock adjacent opportunities that aren’t visible in the original thesis.
Why Oaktree largely avoided Amazon: predictability and the “too hard pile”
Howard Marks explains Amazon didn’t intersect with his investing career because Oaktree focuses on credit and predictability, and historically had little involvement with tech companies. He likens their approach to Buffett and Munger’s willingness to pass on what’s hard to forecast.
The danger of superficial reads: income statement losses vs. business reality
Andrew notes that for years critics concluded Amazon could never be profitable by looking mainly at reported losses. He argues that this conclusion came from shallow analysis and that deeper fundamentals—especially cash flow dynamics—told a different story.
Cash conversion cycle and early strength in free cash flow
Andrew points out Amazon benefited from a favorable cash conversion cycle, making the business healthier in free-cash-flow terms earlier than earnings suggested. Ben adds context via Michael Mauboussin’s “cashflow.com” framing versus bearish “amazon.bomb/toast” narratives.
Complexity of modern companies: you must go deep
Howard connects the Amazon example to a broader shift: today’s important companies are more complex than the simpler “deep value era” businesses. This complexity raises the bar for analysis and makes surface-level metrics less reliable.
Optional profitability: when losses are strategic, not a failure
Howard describes a central divergence between value and growth styles: value investors seek near-term profits and cash flows, while growth investors may accept losses if they expand future payoff potential. Amazon’s history illustrates how losses can reflect intentional reinvestment rather than a broken model.
Rejecting rigid camps: losses can be smart—or reckless
Andrew emphasizes that neither “losses don’t matter” nor “losses are always bad” is a workable rule. The right approach requires case-by-case judgment about whether reinvestment creates durable value.
The memo’s core theme: value vs. growth is an overdrawn dichotomy
Howard concludes that the biggest theme of the memo is that the value/growth split shouldn’t be hardwired. He reinforces the idea with a Mark Twain quote about flawed generalizations, arguing for more integrated thinking.
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