Netflix, Inc. (NFLX): Were Hedge Funds Right About This Stock?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of Netflix, Inc. (NASDAQ:NFLX).

Is Netflix, Inc. (NASDAQ:NFLX) going to take off soon? Investors who are in the know were betting on the stock. The number of bullish hedge fund positions moved up by 3 in recent months. Netflix, Inc. (NASDAQ:NFLX) was in 113 hedge funds’ portfolios at the end of the second quarter of 2021. 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Boykin Curry of Eagle Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy 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. Now we’re going to check out the fresh hedge fund action regarding Netflix, Inc. (NASDAQ:NFLX).

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

At the end of June, a total of 113 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NFLX over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the number one call position in Netflix, Inc. (NASDAQ:NFLX), worth close to $2.1957 billion, amounting 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; 1.3% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include 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, setting aside 11.74 percent of its 13F equity portfolio to NFLX.

As one would reasonably expect, key hedge funds have jumped into Netflix, Inc. (NASDAQ:NFLX) headfirst. Soroban Capital Partners, managed by Eric W. Mandelblatt and Gaurav Kapadia, created the most valuable 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 initiated a $102.2 million position during the quarter. The other funds with new positions in the stock are Gaurav Kapadia’s XN Exponent Advisors, Stanley Druckenmiller’s Duquesne Capital, and Oscar Hattink’s BlueDrive Global Investors.

Let’s now take a look at hedge fund activity in other stocks similar to Netflix, Inc. (NASDAQ:NFLX). These stocks are 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 values are closest to NFLX’s market value.

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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 26.3% in 2021 through October 29th but still managed to beat the market by 2.3 percentage points. Hedge funds were also right about betting on NFLX as the stock returned 30.7% since the end of June (through 10/29) 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.