Pershing Square Reinvests in Netflix After Previous $400 Million Loss

Bill Ackman's Pershing Square has added around 3 million shares of Netflix (NASDAQ:NFLX) to its portfolio, a significant change from their previous stance in 2022 when they dumped their stake at a reported loss of $400 million. This new position represents about 4.9% of the firm's portfolio.

This move is part of a broader repositioning by Pershing Square, which has unveiled six new holdings simultaneously: Netflix, Visa, Mastercard, eye care firm Alcon, exchange operator Intercontinental Exchange, and financial data provider S&P Global. According to Reuters, this marks the billionaire investor's biggest portfolio overhaul in years.

Ackman stated that he believes these companies' earnings are poised for strong growth, which he views as the greatest driver of investment value over time. The pitch for Netflix has flipped since 2022, when Ackman lost confidence in the company's prospects and sold. Now, Pershing Square sees Netflix as a dominant player in the streaming market with a huge installed base.

Josh Brown, an analyst, called the move 'classic Bill Ackman' - finding great businesses that stumble upon tough times or sentiment shifts, then waiting patiently to win. Brown noted that Netflix trades at 20 times forward earnings and is expected to have 42% earnings growth in the next year.