Amazon Is Buying Up Billions in Government Bonds

Feb 14, 2019
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Amazon (NASDAQ:AMZN) is buying up government debt at a rapid clip as markets, especially the tech sector during the final quarter of last year, begin to sink.

The company, led by CEO Jeff Bezos, began 2018 holding about $5 billion worth of government securities, including 2-year and 10-year bonds, as well as some additional types of securities backed by the United States.

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By the close of last year, Amazon held a record $11.7 billion in U.S. debt. Bezos and Co continue to find themselves keeping more and more profits. The organization found itself with a record $10 billion in profit during the year and this no doubt led to them finding a safe investment to harbor all that cash.

Many companies want to look at safer investment options and government bonds are a surefire way to make that happen.

While Amazon has an all-time high of its cash assets tied up in bonds, now at about 28 percent, this pales in comparison to other large tech companies.

Microsoft (NASDAQ:MSFT), for instance, leads the pack with almost 80 percent of its cash and cash equivalent portfolio tied up in government debt. Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB)are a bit less risk-averse with about half their cash in government securities.

Generally speaking, large companies moving funds into safer bets signal an overall less optimistic view of the market, at least from the company’s perspective. Recent reports have shown that US car loan defaults are on the rise and its possible that given Amazon’s large size and reach, that they can simply peer into their own network of business units to get a good gauge of how the market is behaving.

It might not be a bad idea to take note of the world’s most valuable company, helmed by the world’s richest man, and their broader investment strategy.

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