ClearBridge Investments, an investment management firm, published its “Large Cap Growth Strategy” first quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Large Cap Growth Strategy underperformed its Russell 1000 Growth Index benchmark during the first quarter. On an absolute basis, the Strategy suffered losses across seven of the eight sectors in which it was invested (out of 11 sectors total). The leading detractors of performance were in the communication services and information technology (IT) sectors, while the financials sector was a contributor. 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, ClearBridge Investments Large Cap Growth Strategy 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 $151.5 billion market capitalization. Netflix, Inc. (NASDAQ:NFLX) delivered a -43.38% return since the beginning of the year, while its 12-month returns are down by -37.89%. The stock closed at $341.13 per share on April 15, 2022.
Here is what ClearBridge Investments Large Cap Growth Strategy has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q1 2022 investor letter:
“After being a prime beneficiary of increased viewing patterns during the stay-at-home period of COVID-19, Netflix is recalibrating what a normal growth trajectory will look like as global economies fully reopen. The stock fell sharply after the company modestly reduced its net subscriber additions for the current quarter, calling into question its ability to continue to deliver double-digit subscriber growth.
We believe one of our edges as active managers is our long-term orientation and willingness to be both early and patient with additions to the portfolio. With Netflix, we remain convinced that our thesis for owning the stock is intact. While some fear the U.S. streaming market is becoming saturated, Netflix’s penetration of global broadband homes is still less than 50%, a figure that doesn’t even include the opportunity to attract more mobile-only smartphone users. We believe Netflix can improve returns even if growth is weighted towards lower average revenue per user international markets while the company’s nascent video game strategy and potential pivots into advertising represent upside scenarios not reflected in its current valuation.
Most of the net subscription growth will occur outside the U.S., as will much of the content creation, which will be much lower cost. In retesting the competitive landscape for streaming, we are encouraged that Netflix has been able to pass on price increases without existing subscriber attrition. Churn remains exceptionally low and engagement exceptionally high. The company is also committed to reducing its content spend if subscriber growth remains challenged.”
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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 -34.30% return in the past 3 months.
In April 2022, we published an article that includes 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.
