After formerly making the headlines for betting against Netflix, Inc. (NASDAQ:NFLX), renowned investor Whitney Tilson has changed his negative outlook, and now touts the company. Tilson, who currently runs T2 partners, made this known through the 8th annual Value Investing Congress. The congress, which was founded by him, was held on Monday.
A top priority on his agenda was his take on Netflix, Inc. (NASDAQ:NFLX). In an unexpected twist, the prominent hedge fund manager noted that Netflix’s global prospects were encouraging. Tilson was particular on Netflix’s increased potential for strong global growth. In fact, the gist of his argument on Netflix revolved around the company’s possibilities of increasing its global footprint. "It has a light business model and can tap the large international markets," he remarked.
Tilson's focus seems to be latched on to long term prospects. He notes that Netflix, Inc. (NASDAQ:NFLX) has performed incredibly well over the longer term, citing a 153.45 percent gain over the past half decade.
Interesting comparison and increased positive sentiment among hedge fund managers
While exhibiting a notable slant towards the laudable risk/reward profile that Netflix presents, Tilson also compared Netflix to Amazon.
His comparison, which initially manifested as a typical Company A- Company B comparison, pulled scenes from 2001. At the time, Amazon .com, Inc. (NASDAQ:AMZN) was going through a similar situation when compared with Netflix. Tilson however pointed out slight disparities, remarking that unlike Amazon; Netflix currently has half as much as debt and is less capital intensive. Tilson then went forward to note that despite the downfalls, Amazon pushed ahead to become a 20x stock over the last decade. His main point of argument was that both companies were willing to give up near term opportunities in favor of reinvesting in promising global growth opportunities. The 50.75 percent dip in share price over the past 12 months didn’t seem to sway Tilson’s stand, as the global growth prospects seemed to outweigh the slump.
Tilson is not alone in touting Netflix, Inc. (NASDAQ:NFLX). Apparently, other prominent hedge fund managers like Steve Mandel and George Soros have also stepped into the picture. All these hedge fund managers seem to be focused on the long haul, underscoring the idea that Netflix’s long term prospects are placed in the right path.
Tilson’s fund has been fairly stagnant throughout the year, despite a few notable fluctuations. This comes after it dipped well below the break-even point in 2011, something that has been partly tied to its earlier wrong footing on Netflix.