Here’s Why You Should Consider Investing in Netflix (NFLX)

First Pacific Advisors, LLC, an investment management firm, published its “FPA U.S. Core Equity Fund” third-quarter 2021 investor letter – a copy of which can be downloaded here. In the third quarter, the FPA U.S. Core Equity Fund, Inc.’s (“Fund”) performance was -0.13% (0.14% before fees and expenses) compared to the 0.58% total return of the S&P 500 Index (“Index” or “S&P 500”), the Fund’s benchmark. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

FPA U.S. Core Equity Fund, in its Q3 2021 investor letter, mentioned Netflix, Inc. (NASDAQ: NFLX) and discussed its stance on the firm. Netflix, Inc. is a Los Gatos, California-based production company with a $272.0 billion market capitalization. NFLX delivered a 13.57% return since the beginning of the year, while its 12-month returns are up by 19.48%. The stock closed at $614.09 per share on December 24, 2021.

Here is what FPA U.S. Core Equity Fund has to say about Netflix, Inc.  in its Q3 2021 investor letter:

“Among the Fund’s biggest winners was Netflix (NASDAQ: NFLX), which appreciated 15.5% during the third quarter. I continue to be very bullish on NFLX’s long-term potential. The market can often take a short-term view and I believe such is the case with how it trades NFLX from quarter to quarter, typically based on how many paid net subscriptions it garners.

I believe the market may define NFLX’s total addressable market too narrowly by focusing on the approximate 74 million of pay TV households in the U.S. and one billion pay TV households across the globe or about 700 million ex-China. Based on those denominators, NFLX’s paid memberships of approximately 74 million in North America and 135 million throughout the rest of the world (as of 6/30/21) would point to a business that is much more mature (at around 30% penetrated) than it likely is…” (Click here to see the full text)

Photo by Alexander Shatov on Unsplash

Based on our calculations, Netflix, Inc. (NASDAQ: NFLX) ranks 15th in our list of the 30 Most Popular Stocks Among Hedge Funds. NFLX was in 106 hedge fund portfolios at the end of the third quarter of 2021, compared to 113 funds in the previous quarter. Netflix, Inc. (NASDAQ: NFLX) delivered a 3.51% return in the past 3 months.

In October this year, we also shared another hedge fund’s views on NFLX in another article. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q3 page.

Disclosure: None. This article is originally published at Insider Monkey.