Netflix, Inc. (NASDAQ:NFLX) shares are 2.5% in the green today after a report from the Financial Times claimed that a senior Apple Inc. (NASDAQ:AAPL) executive had pitched the idea of the company acquiring Time Warner Inc (NYSE:TWX). According to the source, Eddy Cue, Apple’s senior vice president who oversees the iTunes store, Apple Music and iCloud, discussed the idea in a meeting at Time Warner’s Manhattan headquarters in 2015. The source cited some unidentified people who said that Apple was actually more likely to go after Netflix though. The report suggests that Apple is considering investing in original content, as its core iPhone business is starting to show the first signs of decline. Drexel Hamilton analyst, Tony Wible, also added fuel to the Netflix rise today, stating that he doesn’t see Amazon.com, Inc. (NASDAQ:AMZN)’s streaming service as a direct threat to the company. The analyst has a ‘Buy’ rating and $120 price target on Netflix.
We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity (see the details here). With this in mind, as the latest round of 13F filings has just ended, let’s examine the smart money sentiment towards Netflix, Inc. (NASDAQ:NFLX) .
Hedge fund interest in Netflix, Inc. (NASDAQ:NFLX) shares was flat during the first quarter. This is usually a negative indicator. At the end of the first quarter, a total of 64 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the end from the end of 2015. At the end of this article we will also compare NFLX to other stocks including FedEx Corporation (NYSE:FDX), Infosys Ltd ADR (NYSE:INFY), and American Tower Corp (NYSE:AMT) to get a better sense of its popularity.
Of the funds tracked by Insider Monkey, Tiger Global Management LLC, managed by Chase Coleman, holds the largest position in Netflix, Inc. (NASDAQ:NFLX). Tiger Global Management LLC has a $1.84 billion position in the stock, comprising 26.5% of its 13F portfolio. The second largest stake is held by SRS Investment Management, led by Karthik Sarma, holding a $1.06 billion position; the fund has 38.5% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Andreas Halvorsen’s Viking Global, Philippe Laffont’s Coatue Management, and David Goel and Paul Ferri’s Matrix Capital Management.
On the next page we’ll look at some funds that sold out of positions in Netflix during Q1, as well as compare the stock to a handful of others with similar market caps.
Judging by the fact that sentiment in Netflix, Inc. (NASDAQ:NFLX) was flat overall, we can see that there is a sect of money managers that decided to sell off their full holdings last quarter. Intriguingly, Jim Simons’ Renaissance Technologies sold off the biggest investment of all the hedgies watched by Insider Monkey, worth an estimated $71.8 million in stock, and John Burbank’s Passport Capital was right behind this move, as the fund said goodbye to about $62.9 million worth.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Netflix, Inc. (NASDAQ:NFLX) but similarly valued. These stocks are FedEx Corporation (NYSE:FDX), Infosys Ltd ADR (NYSE:INFY), American Tower Corp (NYSE:AMT), and Carnival plc (ADR) (NYSE:CUK). This group of stocks’ market caps resemble NFLX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1.77 billion. That figure was $6.66 billion in NFLX’s case. FedEx Corporation (NYSE:FDX) is the most popular stock in this table. On the other hand Carnival plc (ADR) (NYSE:CUK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Netflix, Inc. (NASDAQ:NFLX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and have a lot of money invested in it, it may be a good idea to analyze it in detail and potentially include it in your portfolio.