Is Netflix (NFLX) A Smart Long-Term Buy?

Pershing Square Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. An annual portfolio net return of 26.9% was recorded by the fund for the whole year of 2021, versus the S&P 500 Index, the FTSE 100, and MSCI World Index that delivered a 28.7%, 17.4%, and 22.3% return respectively for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Pershing Square Capital Management, in its Q4 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 $173.7 billion market capitalization. NFLX delivered a -35.05% return since the beginning of the year, while its 12-month returns are down by -27.57%. The stock closed at $391.29 per share on February 19, 2022.

Here is what Pershing Square Capital Management has to say about Netflix, Inc. in its Q4 2021 investor letter:

“Amidst a volatile market backdrop in 2022, hedging gains provided the capital to fund the purchase of Netflix. World’s leading streaming subscription video-on-demand company. Launched its category-pioneering streaming service in 2007. 222 million global paid subscribers in over 190 countries today. Vast and diverse library of high-quality content. Most Emmy-winning and Oscar-winning TV network / studio of 2021. Industry-leading volume of original content episodes released per quarter. High-performance culture led by a visionary management team. Subscription-based, highly recurring revenues. 26% annual streaming revenue growth and ~360 bps of average annual EBIT margin expansion over last three years. Modest financial leverage (1.5x Net Debt / EBITDA)…” (Click here to see the full text)

Photo by Alexander Shatov on Unsplash

Our calculations show that Netflix, Inc. (NASDAQ: NFLX) ranks 10th on our list of the 30 Most Popular Stocks Among Hedge Funds. NFLX was in 113 hedge fund portfolios at the end of the third quarter of 2021, compared to 106 funds in the previous quarter. Netflix, Inc. (NASDAQ: NFLX) delivered a -42.36% return in the past 3 months.

In January 2022, we also shared another hedge fund’s views on NFLX in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

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