whitney tilson

Netflix Is Like Amazon Ten Years Ago — Tilson

Value investor Whitney Tilson tells “Fast Money Halftime” why he thinks Netflix has the potential to soar and become “this decade’s Amazon.”

Whitney Tilson’s Best Value Plays

Whitney Tilson, Tilson T2 Partners, shares his picks for value investing.

Transcript:

and so up 50 bucks a share so still cheap in my opinion. you were one of the most vocal supporters of john johnson and you’re no longer in the name. steve weiss is sitting over herewith a small ego but he is probably going to think that he finally convinced you this was not the one to go along on. yes. why did you get out and why did you stay out? as part of the transition inmy business we sold town down all the liquid stuff and i had to decide what to buy back and j.c. penny was a hard one. i still like ron johnson and i believe in the long-term turn around but the short-term is much i don’t carier than ron and even the board would say it has been. right now i would love to getenough conviction to buy it back. i just want to see anotherquarter or two of earnings and see that things are starting toburn before i get back in. it will be interesting to see. bill ackman is speaking at 5:00 today, big position, noted position in jcpenney, what certainly he may have to say about that one.first of all, whitney, since you’re the host today i want to try to be as helpful as i was. on netflix i don’t see it the same way. i love aig but netflix, the difference between them and amazon is that amazon has the bricks and mortars they already spent money on putting in the ground where as netflix costs keep going up and the head of time warner about a year ago said specifically netflix you’re not going to get it as cheap as you used to and you have so many competing carriers of content versus amazon where the content comes off for free because you want all of this there. i just don’t see it the same. i see netflix on the way down although i am not sure coming here but i don’t really — i see the risk. i don’t see the reward there. it is easy to say. it is really think about the analogy i was making, the amazon ten years ago, the stock had gone from 400 to 12 and they were competing against walmart, et cetera, and they were competing in big box companies and losing money like crazy which netflix is not and they had a net debt position and netflix has a net cash position. it is not a perfect analogy. i see a very entrepreneurial company using technology to take an old product and deliver it in a new way to customers with a high value proposition. it only costs 26 cents a day for subscribers and there is very high customer satisfaction and there is a real global growth opportunity, the kind of global growth opportunity amazon had ten years ago and still to some extent have and so netflix could get on that kind of curve. i am not saying i think it islikely. if there is a 10% chance of a ten bagger — pretty interesting. you’re actually viewing this right now when you’re comparing it to amazon and this could be a ten bagger. you talked about amazon being a 20 bagger. do you see that as theinternational growth, the cost of con at the particular timecoming down because they moved in the tv series? i agree with steve’s point, the cost of content will probably rise overtime. as reed hastings said, the content providers want to charge me as much as they can. to get the content i only pay one dollar more than the next bitter. who is the next bidder here? is it hulu with less than 10% of subscribers of netflix? amazon seems willing to spend money but how much money are they really going to be willing to spend given they’re not charging anything for it?they show advertisers spend everything because you keemsaying earnings out and the other competitors are the cablecompanies that you’re already paying for your cable so you get it free. i get hbo on go for free. yep. it is something. there are a lot of competitors looking at this market. what i am watching is looking for anybody getting real traction because there is lots of talk and there is no real evidence that any competitor is out there getting traction at this point. what i like to do, can you give me your quickverall view of the stock market given where we have come this year? sure. i think the u.s. economy is having a step i had economic recovery. gdp is positive creating jobsevery month and not really enough to — not the kind of strong economy everyone wants but we’re sort of mulgding along. i expect that to continue for a while. the stock market seems to have gotten ahead of in the tense the s&p is up 16, 17% already this year and in the bottoms up research i am finding five to ten interesting short ideas to look at and do research on for every interesting long idea. that to many extent tells me it is i much more interesting for a hedge fund that does shorting. the interesting thing is a good number of hedge funds underperforms. the market, you will be hearing from the best and brightest names in that try and we’ll sternl r certainly bait outtheir wau. the value ip .ing gres skpn

Whitney Tilson: Netflix Better Than Amazon

Netflix has a lot more upside potential than online retailer Amazon, Whitney Tilson of T2 Partners says.

Transcript:
does netflix have a better business model than amazon? that’s what investor whitney tillson told this conference today. he joins us now with more picks. good to see you hear. congratulations on another great event. have you 400 or so folks here and ackman and einhorn and you are the one that made bigcomments today. netflix has a better business than amazon.did you have too much coffee this morning? it was rel a comparison of amazon ten years ago, what did it look like when it was the same size as netflix? it turned outn i 2001 amazon’srevenues, market cap, number of customers were virtuallyidentical to netflix in 2011. two companies ten years apart and very similar and my point is that’s the kind of upside netflix has if it executes well and i see both as global businesses and by the way amazon has been a 20 bagger since then and i point out netflix has a lighter business model. they don’t have to deliverproducts and build warehouses and so forth. it is inherently a higher margin business, lighter business model. there is a lot of execution risk. i was pointing out one high upside scenario is it could be this decade’s amazon. why do you remain soconfident in that name in the face that you yourself mentionedand so, too, do so many of the others on the bearish side andthe interest is huge. i know. it is probably the most controversial thing in my portfolio. my portfolio

1, 2  - View Full Page