Artisan Partners, an investment management company, released its “Artisan Value Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. The robust US economy, a general disinflation trend, and increased corporate earnings pushed the US equity markets to a new all-time high in the first quarter. The fund’s Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned 8.65%, 8.71%, and 8.71% respectively, in the first quarter compared to an 8.99% return for the Russell 1000 Value Index. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2024.
Artisan Value Fund highlighted stocks like Netflix, Inc. (NASDAQ:NFLX), in the first quarter 2024 investor letter. Netflix, Inc. (NASDAQ:NFLX) is a streaming platform with a market capitalization of $273.911 billion. One-month return of Netflix, Inc. (NASDAQ:NFLX) was 12.55%, and its shares gained 77.07% of their value over the last 52 weeks. On May 23, 2024, Netflix, Inc. (NASDAQ:NFLX) stock closed at $635.67 per share.
Artisan Value Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its first quarter 2024 investor letter:
“We had one sale in Q1, exiting Netflix, Inc. (NASDAQ:NFLX), one of our top performers of 2023. The video streaming company has been a strong performer as price increases and a crackdown on password sharing have driven subscriber additions and higher average revenue per user. Netflix has also evolved its business model over the past year, becoming more efficient with its content spending, cracking down on password sharing and introducing a lower cost advertising-supported tier (lowering subscriber churn). Importantly, these changes have led to robust earnings and free cash flow growth. When we purchased Netflix in January 2022, the stock was selling significantly below our estimates of fair value, and by April 2022 when we added to our position after another downdraft, it was selling at just 9X our estimate of normalized earnings. At that time, there were questions about the long-term economics of streaming, slowing subscriber growth and increasing competition. Despite the growth slowdown, we viewed Netflix’s position as the largest streaming service (~260 million subscribers currently) as a key strategic advantage and believed it had a significant runway of growth. Though Netflix is no longer a holding, we still like the business. Netflix remains well positioned due to its scale advantages (lower marketing costs per subscriber, greater purchasing power for content, the broadest audience, the most data and a growing library of owned content resulting in the lowest churn in the industry) to generate significant free cash flow despite aggressive content investments. However, the stock, which is now selling for over 30X forward earnings, has moved above our estimated range of fair value, and we believe the current price embeds high probabilities of best-case scenarios with little margin of safety.”
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Netflix, Inc. (NASDAQ:NFLX) is in 23rd position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 107 hedge fund portfolios held Netflix, Inc. (NASDAQ:NFLX) at the end of the first quarter which was 89 in the previous quarter.
In another article, we discussed Netflix, Inc. (NASDAQ:NFLX) and shared the list of best streaming service stocks to buy. Netflix, Inc. (NASDAQ:NFLX) was the top absolute contributor of Polen Focus Growth Strategy in the first quarter 2024. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
