RiverPark Funds, an investment management firm, published its “RiverPark Long/Short Opportunity Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. The RiverPark Large Growth Fund (the “Fund”)’s institutional shares returned -25.78% for the first quarter of 2022, while its benchmarks, the S&P 500 Total Return Index (“S&P”) declined by -4.60%, the HFRI Equity Hedge Index returned -3.86%, while the Morningstar L/S Equity Category returned -2.75% for the same period. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, RiverPark Long/Short Opportunity Fund mentioned Netflix, Inc. (NASDAQ:NFLX) and explained its insights for the company. Founded in 1997, Netflix, Inc. (NASDAQ:NFLX) is a Los Gatos, California-based subscription streaming service and production company with an $83.7 billion market capitalization. Netflix, Inc. (NASDAQ:NFLX) delivered a -68.70% return since the beginning of the year, while its 12-month returns are down by -62.96%. The stock closed at $188.54 per share on April 27, 2022.
Here is what RiverPark Long/Short Opportunity Fund has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q1 2022 investor letter:
“Netflix is the global streaming TV leader and is more than twice the size of each of Hulu, Amazon Prime Video and Disney+. And yet, with an estimated 800 million+ global pay-tv subscribers (excluding China) yet to adopt streaming, we believe Netflix still has a large runway for continued subscriber growth. In addition to its growth opportunities in traditional TV and movie streaming, the company also recently launched a mobile gaming service that opens an additional $100 billion-plus market for future growth. Netflix has spent over a decade building its global footprint of subscribers as well as its now deep library of both global and local content and is now transitioning to accelerating it margins and free cash flow generation.
We believe that 2022 is an inflection year for Netflix as management has stated that the company should finally become and then remain FCF positive for the foreseeable future. A combination of price increases and a stabilization of content investments should position the company to continue its mid-teens annual revenue growth while driving improved operating margin to north of 30% over the next few years (revenue grew 19% for 2021 and operating margin was 21%, up from 10% in 2018). We also believe that the stabilization of content spend should allow the company to materially scale its annual free cash flow (which can be used to retire debt, accelerate growth and/or return to shareholders). We took advantage of the over 50% drop in the company’s shares over the last several months to initiate a small position in this world class innovative growth leader.”
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. Netflix, Inc. (NASDAQ:NFLX) was in 113 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 106 funds in the previous quarter. Netflix, Inc. (NASDAQ:NFLX) delivered a -51.24% return in the past 3 months.
Earlier this month, we also shared another hedge fund’s views on Netflix, Inc. (NASDAQ:NFLX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
