Bireme Capital, an investment management firm, published its 1st-quarter 2022 investor letter – a copy of which can be downloaded here. Fundamental Value had a solid quarter, essentially flat against a loss of -4.6% for the S&P 500. The fund’s short positions made the difference. Its average short name was down -by 17% and the short book contributed 5.5% to the quarter’s return. FV has compounded at 24.7% net of fees since inception in 2016, outperforming the S&P 500 by 8.6% annually. 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, Bireme Capital 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 a $93.2 billion market capitalization. Netflix, Inc. (NASDAQ:NFLX) delivered a -65.16% return since the beginning of the year, while its 12-month returns are down by -58.87%. The stock closed at $209.91 per share on April 25, 2022.
Here is what Bireme Capital has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q1 2022 investor letter:
“At the beginning of April we made an investment in Netflix. We posted the thesis on our blog here. We wrote that ‘we would not be surprised if NFLX traded down from here’ and that ‘we would be eager buyers on further weakness (assuming the NFLX business case isn’t materially impaired in the meantime.’
When we wrote that we would not be surprised if Netflix declined, we were envisioning potential valuation compression from a further wash-out in the growth stock bubble. We were not envisioning the dramatic negative turn in subscriber growth and company guidance revealed in Netflix’s Q1 results that sent the stock down more than 30% overnight.
Shares now trade at around $215 per share, a steep fall in a very short time from our average price around $350. We should note here that our Netflix position was conservatively sized; our losses to date on the Netflix position amount to less than 2% of our portfolio NAV. Furthermore, our significant short book of correlated stocks has also mitigated the hit to the portfolio. As of April 21st, FV remains up 3.6% for the year compared to a loss of -7.5% for the S&P 500…” (Click here to see the full text)
Photo by Thibault Penin 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 -45.78% 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.
