Amazon never seems to be able to generate profits, yet the investing public continues to be amazingly tolerant, said Paul Isaac, founder of the $900 million hedge fund Arbiter Partners.
"People are looking for growth, and they see revenue growth. They buy into the idea of eventual profitability. But I'm not so convinced," he told CNBC's "Squawk Box" on Tuesday.
Amazon falls into a category of "growth model 4.0" companies that "theoretically are going to grow into great profitability," Isaac argued, saying, in the meantime, they're "funded through a combination of negative working capital dynamics [and] stock-based compensation."
He did acknowledge that "Amazon is probably the most successful company in that model." The stock has increased 55 percent so far this year, and 658 percent over the past five years.
"We've shorted it off and on for some time. The short position we have on now has gotten large because the stock has run up," Isaac disclosed. "I think that Amazon probably has some pretty good businesses in it. But given its valuation, I think it's very expensive."
The shorting strategy has not worked so far, he admitted. "You can't win them all."
—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.