Hedge Funds Are Buying Netflix, Inc. (NFLX)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Netflix, Inc. (NASDAQ:NFLX).

Is Netflix, Inc. (NASDAQ:NFLX) worth your attention right now? Investors who are in the know were in a bullish mood. The number of bullish hedge fund bets rose by 3 lately. Netflix, Inc. (NASDAQ:NFLX) was in 113 hedge funds’ portfolios at the end of June. The all time high for this statistic is 116. Our calculations also showed that NFLX ranked 13th among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 110 hedge funds in our database with NFLX positions at the end of the first quarter.

In today’s marketplace there are dozens of tools shareholders put to use to appraise publicly traded companies. A couple of the less known tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top money managers can trounce the broader indices by a solid amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .

Boykin Curry of Eagle Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a peek at the latest hedge fund action encompassing Netflix, Inc. (NASDAQ:NFLX).

Do Hedge Funds Think NFLX Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 113 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 113 hedge funds with a bullish position in NFLX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest call position in Netflix, Inc. (NASDAQ:NFLX), worth close to $2.1957 billion, corresponding to 0.5% of its total 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $2.1041 billion position; the fund has 1.3% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of Boykin Curry’s Eagle Capital Management, David Goel and Paul Ferri’s Matrix Capital Management and John Armitage’s Egerton Capital Limited. In terms of the portfolio weights assigned to each position Immersion Capital allocated the biggest weight to Netflix, Inc. (NASDAQ:NFLX), around 12.27% of its 13F portfolio. Blacksheep Fund Management is also relatively very bullish on the stock, dishing out 11.74 percent of its 13F equity portfolio to NFLX.

Consequently, specific money managers were leading the bulls’ herd. Soroban Capital Partners, managed by Eric W. Mandelblatt and Gaurav Kapadia, initiated the biggest position in Netflix, Inc. (NASDAQ:NFLX). Soroban Capital Partners had $337.6 million invested in the company at the end of the quarter. Gavin Baker’s Atreides Management also made a $102.2 million investment in the stock during the quarter. The other funds with brand new NFLX positions are Gaurav Kapadia’s XN Exponent Advisors, Stanley Druckenmiller’s Duquesne Capital, and Oscar Hattink’s BlueDrive Global Investors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Netflix, Inc. (NASDAQ:NFLX) but similarly valued. We will take a look at The Coca-Cola Company (NYSE:KO), Verizon Communications Inc. (NYSE:VZ), Intel Corporation (NASDAQ:INTC), salesforce.com, inc. (NYSE:CRM), Cisco Systems, Inc. (NASDAQ:CSCO), Eli Lilly and Company (NYSE:LLY), and Pfizer Inc. (NYSE:PFE). This group of stocks’ market caps resemble NFLX’s market cap.

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As you can see these stocks had an average of 71.7 hedge funds with bullish positions and the average amount invested in these stocks was $9147 million. That figure was $13217 million in NFLX’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Cisco Systems, Inc. (NASDAQ:CSCO) is the least popular one with only 60 bullish hedge fund positions. Compared to these stocks Netflix, Inc. (NASDAQ:NFLX) is more popular among hedge funds. Our overall hedge fund sentiment score for NFLX is 93.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24.1% in 2021 through September 20th but still managed to beat the market by 6.9 percentage points. Hedge funds were also right about betting on NFLX as the stock returned 8.9% since the end of June (through 9/20) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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