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 Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

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!