Bill Ackman and Netflix - A Lesson in Buying High and Selling Low
Sometimes you win, sometimes you lose
In January 2022, Bill Ackman bought a large position in Netflix - around 3.1 million shares in the streaming service. According to Business Insider (Feb 7, 2022)
Billionaire investor Bill Ackman hit headlines last month when he disclosed a $1.1 billion bet on Netflix stocks - despite the recent drop in stock of the streaming giant from $701 to just over $400.
"We have greatly admired Netflix both as consumers and investors, but have never previously owned a stake in the company," Ackman wrote in a letter to investors in late January. "The opportunity [to buy] at an attractive valuation emerged when investors reacted negatively to the recent quarter's subscriber growth and management's short-term guidance."
Ackman believed that Netflix was an outstanding streaming business with “enormous growth potential.” The Motley Fool agreed— “Having a well-regarded investor like Bill Ackman endorse the company is certainly a positive sign for Netflix. […] you may want to consider buying the stock today.” (The Motley Fool, Feb 5, 2022)
Jim Cramer Weighs In
And who could forget Jim Cramer’s advice:
As the stock was hitting some troubled waters in January 2022, Bill reminded investors:
"Many of our best investments have emerged when other investors, whose time horizons are short-term, discard great companies at prices that look extraordinarily attractive when one has a long-term horizon", Ackman wrote in a letter to Pershing investors last week.
As of last week (4/21/2022), the stock crashed like a Mike Tyson opponent on a Saturday Night in Vegas.
Ackman Liquidates
Bill Ackman, long-term investor, liquidated his Netflix position on Wednesday (April 20, 2022) locking in $400 million dollar loss.
You win some, you lose some.
On another note, if you have not watched the Carl Icahn and Bill Ackman feud, enjoy:
Check out HBO Max documentary on Carl Icahn - here: