Ensemble Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be seen here. While this recent quarter represents the fund’s largest degree of underperformance, so too did its 2020 results. In 2020 the Fund was up 30.89% vs the S&P 500 up 18.39% for 12.51% outperformance. It is clear to us that the pandemic has caused much larger and more rapid relative swings in asset pricing as investors struggle to grapple with the implications of an economic event of an unprecedented nature. In this context, you can see that the fund’s first-quarter underperformance of 11.03% is clearly a bad outcome, and yet is not inconsistent with other periods of weak performance that have occurred in the context of its long-term track record of outperformance. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Ensemble Capital mentioned Netflix, Inc. (NASDAQ:NFLX) and explained its insights for the company. Founded in 1997, Netflix, Inc. (NASDAQ:NFLX) is a Los Gatos, California-based subscription streaming service and production company with a $100.4 billion market capitalization. Netflix, Inc. (NASDAQ:NFLX) delivered a -62.45% return since the beginning of the year, while its 12-month returns are down by -55.55%. The stock closed at $226.19 per share on April 20, 2022.
Here is what Ensemble Capital has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q1 2022 investor letter:
“Netflix (7.7% weight in the Fund): Our initial investment in Netflix in 2016 was based in large part on the then untapped pricing power we believed the company had. We explored this pricing power, and why it was so valuable to Netflix, in THIS 2018 ESSAY. Over the last five years, Netflix has raised the average price of their service in the US by 49% even as they successfully increased their number of subscribers by 42%. We believe strongly that Netflix’s service remains priced well below the value it offers and that the company will be able to continue to raise prices to offset inflation and enhance their future earnings.”
Pixabay/Public Domain
Our calculations show that Netflix, Inc. (NASDAQ:NFLX) ranks 10th on our list of the 30 Most Popular Stocks Among Hedge Funds. Netflix, Inc. (NASDAQ:NFLX) was in 113 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 106 funds in the previous quarter. Netflix, Inc. (NASDAQ:NFLX) delivered a -56.15% return in the past 3 months.
In April 2022, we also shared another hedge fund’s views on Netflix, Inc. (NASDAQ:NFLX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
