Sears $SHLD Netflix $NFLX Rally in First Quarter, Hedge Funds Win

ESL INVESTMENTSRecently in Bloomberg’s Inside Track, Scarlet Fu discusses the hedge fund managers that have had the biggest gains so far this year. On the show, she talks about fund managers Eddie Lampert of ESL Investments, Bruce Berkowitz of Fairholme and John Griffin‘s Blue Ridge Capital and how they were able to beat the odds thanks to the surprise performances of Sears (SHLD) and Netflix (NFLX), which have gained 110.79% and 59.25% year to date, respectively.

Eddie Lampert and Bruce Berkowitz owned significant positions in Sears at the end of the fourth quarter. Lampert owned 48.03 million shares in Sears at the end of December, a position valued at just under $1.53 billion while Berkowitz had a 16.11 million share or $511.93 million stake in the company. Sears had been looking pretty rough at the end of 2011. It had just announced that it could be closing as many as 120 stores after it became apparent that its sales results were much worse than expected.

But, Lampert didn’t lose faith. In January, he bought 4.46 million shares for his personal investment in Sears from his fund ESL Investments, a market value of roughly $145 million. He further increased his personal stake in the company, buying another $12 million in shares on the open market. Since all this happened, Sears’ share price has soared. Investors are encouraged by the announcement that Sears would be separating some of its smaller businesses, like Craftsman and Kenmore,  and selling some of its real estate – efforts that are expected to net the company as much as $770 million. There is also some speculation that Lampert could take the company private. Whatever the reason, the company’s share price has increased dramatically since the start of the new year.

Netflix has also been a winner. While there were many who thought that the stock would plummet after losing its Starz contract, the company has proved to be more robust than that. It was able to develop a range of new agreements, like its one with the CW. Further, right now, there are very few companies presenting alternatives to the service – Amazon Streaming Video and Hulu are two close rivals with similar pricing that stream both movies and television shows. Also, Netflix, as an early mover, has apps already in place in a variety of technologies that its competitors simply do not. For instance, if you buy a Internet television, there will likely be an app already built in for Netflix but the system will likely not support Hulu or Amazon. John Griffin’s Blue Ridge Capital had 2.37 million shares in the company at the end of December, in a position valued at $163.87 million or over 3% of its total portfolio, after upping its holding by 17% during the fourth quarter.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!