While it was the filing of a Schedule 13D with the SEC that first showed the world that investor Carl Icahn had halved his stake in Netflix, Inc. (NASDAQ:NFLX), it is perhaps his use of Twitter that made it clear to the masses that Icahn had decided to sell 2,989,000 shares of Netflix, Inc. (NASDAQ:NFLX) common stock. Icahn has nearly 100,000 followers, and just after 5PM EDT he sent the following tweet:
Icahn’s Tweet about Netflix
Sold block of NFLX today. Wish to thank Reed Hastings, Ted Sarandos, NFLX team, and last but not least Kevin Spacey: http://t.co/BRWpKOBfD2
— Carl Icahn (@Carl_C_Icahn) October 22, 2013
The filing shows
With the filing, Icahn disclosed a 4.52 percent, or 2,665,557 share, stake in the company. This is down 51.89 percent from the 5,541,066 shares held at the end of the latest quarter ending June 30, 2013. Some may wonder why Icahn chose to reduce his stake in the company; it’s important to remember that he still holds more than 5 percent of the company and on average, he has realized a profit of 457 percent on the shares that he sold today.
Shares of Netflix, Inc. (NASDAQ:NFLX) are held in the Sargon Portfolio, which is managed by David Schechter and Brett Icahn, the co-managers pursuant to agreements dated August 1, 2012. While Icahn received public praise for his investment in Netflix, Inc. (NASDAQ:NFLX), the icon himself has thanked his son for being largely responsible for the stake that the Sargon Portfolio held.
The decision behind today’s sale was apparently made by Carl Icahn after Carl Icahn and Icahn Enterprises reached an agreement with David Schechter and Brett Icahn pursuant to the co-managers agreement.
Given Netflix, Inc. (NASDAQ:NFLX)’s strength and the addition of 6 million subscribers per year domestically, one has to wonder what Icahn has planned for the money that was made in the Netflix investment. Additionally, while one could argue that domestic growth of the video streaming company will someday become saturated, its international growth still has a tremendous upside.
That said, Icahn made it clear in a written statement that he still believes in Netflix, Inc. (NASDAQ:NFLX), but that he believes stronger in his experience. Icahn wrote (in considerably more than 140 characters):
While I basically agree with David and Brett’s assessment above and have often held positions for many years, as a hardened veteran of seven bear markets I have learned that when you are lucky and/or smart enough to have made a total return of 457 percent in only 14 months it is time to take some of the chips off the table. I want to thank Reed Hastings, Ted Sarandos and the rest of the Netflix team for a job well done. And last but not least, I wish to thank Kevin Spacey. I also want to thank David and Brett. The Sargon Portfolio which David and Brett co-manage and I supervise, has generated 37 percent annualized returns since its inception on April 1, 2010 through September 30, 2013 and currently manages in excess of $4.8 billion for Icahn Enterprises and my own capital. Icahn Enterprises has assets of approximately $29 billion.