He Was Right About Netflix, Inc. (NFLX). Who Else Does This Hedge Fund Manager Like?

Later, he reversed course and turned bullish on the stock. That’s worked out well, as shares have more than quadrupled since he last argued the case for Netflix, Inc. (NASDAQ:NFLX).

But even above $200 per share, Tilson still likes Netflix. He makes a number of logical arguments: based on Hulu’s valuation and the possibility of it being acquired, shares could have further upside.

But, he steps into the realm of the absurd when he compares the company to Amazon.com, Inc. (NASDAQ:AMZN). Tilson argues that Netflix looks like Amazon looked in 2001 based on a number of financial metrics: number of customers, growth, market cap, etc.

He also points out that both companies have been hated and heavily shorted despite tremendous run ups.

To be fair, it may be an objective fact that Netflix, Inc. (NASDAQ:NFLX) has the same market cap now that Amazon.com, Inc. (NASDAQ:AMZN) had over a decade ago; and it may be that both companies are Internet-based and have visionary CEOs. But these facts are completely irrelevant.

Netflix and Amazon do not have anywhere near the same business model. Amazon.com, Inc. (NASDAQ:AMZN) is a seller of physical and digital goods online. It’s fundamentally a retailer. In contrast, Netflix is a content medium. At best, it’s an alternative to cable; and if the company can execute on its vision, it will become a more popular, Internet-only version of HBO.

By expanding into hardware with its Kindle lineup (and soon phones and set-top boxes) Jeff Bezos wants to make Amazon the Wal-Mart Stores, Inc. (NYSE:WMT) of the digital age. By contrast, Hastings would prefer Netflix became the dominant content provider in a world without traditional cable and broadcast channels.

Tilson’s picks

Tilson has obviously had some success with his picks in the past. A trader who had taken his Netflix, Inc. (NASDAQ:NFLX) advice last year would’ve done quite well.

Buying Spark Networks and staying with Netflix might prove to be equally as rewarding. But based on Tilson’s reasoning, I can’t get behind the trades. Christian Mingle’s potential marketplace is much smaller than Tilson assumes, while comparing Netflix to Amazon is just downright absurd.

The article Fund Manager Who Called for Netflix’s 300% Rally Likes These Stocks originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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