Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” third-quarter 2023 investor letter. A copy of the same can be downloaded here. September saw another duration-driven sell-off in equities similar to what the market witnessed in 4Q 2021 and parts of 2022, but Performance for July-August was meaningfully different from September. In the quarter, the fund fell -3.28% and -3.47%, gross and net of fees, roughly in line with the -3.13% and -3.27% returns of the Russell 1000 Growth and S&P 500 indexes, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Polen Focus Growth Strategy highlighted stocks like Netflix, Inc. (NASDAQ:NFLX) in the third quarter 2023 investor letter. Headquartered in Los Gatos, California, Netflix, Inc. (NASDAQ:NFLX) is a streaming platform. On November 3, 2023, Netflix, Inc. (NASDAQ:NFLX) stock closed at $432.36 per share. One-month return of Netflix, Inc. (NASDAQ:NFLX) was 12.02%, and its shares gained 67.19% of their value over the last 52 weeks. Netflix, Inc. (NASDAQ:NFLX) has a market capitalization of $189.235 billion.
Polen Focus Growth Strategy made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q3 2023 investor letter:
“Netflix, Inc. (NASDAQ:NFLX) shares sold off after their CFO Spence Neumann spoke at a conference. He emphasized more than usual that the company’s prior long-term margin guidance, which called for 300+ basis points of operating margin per year on average, is no longer the expectation. We were neither expecting this level of margin expansion (and we do not believe many other investors were either), nor has the company delivered this level of margin expansion over the past two years. It seems market participants took Neumann’s tone on margins as a negative indicator of the company’s earnings momentum.
We believe that Netflix has plenty of room to expand operating margins from year to year, the magnitude of which will depend largely on annual revenue growth. We view Netflix’s share price weakness simply as an unfortunate reaction to the way Neumann communicated his margin views during the conference.
According to our research, Netflix is the only profitable streaming company of any significance in the world. We continue to expect that paid password sharing and ad-supported subscriptions will allow Netflix to be meaningfully larger and more profitable over the next five years than it is now. Future margin expansion will be more modest than in the recent past. Still, we also expect revenue growth to accelerate from monetizing borrowed passwords and advertisers seeking to buy time in Netflix’s high-value content.”
Photo by Souvik Banerjee on Unsplash
Netflix, Inc. (NASDAQ:NFLX) is in 12th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 114 hedge fund portfolios held Netflix, Inc. (NASDAQ:NFLX) at the end of second quarter which was 108 in the previous quarter.
We discussed Netflix, Inc. (NASDAQ:NFLX) in another article and shared best large cap stocks to buy. In addition, please check out our hedge fund investor letters Q3 2023 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.
