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Few people willingly revisit a $400 million mistake. Bill Ackman just poured more money into his.
The Pershing Square CEO has bought back Netflix shares (1), four years after dumping an earlier stake at a huge loss. The new position accounted for 4.9% of Pershing Square’s portfolio as of June 30 (2).
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“Netflix has since effectively won the streaming wars,” Ackman and Pershing Square chief investment officer Ryan Israel wrote in the firm’s semiannual report (3).
The firm expects double-digit revenue growth, with content expenses rising more slowly than revenue.
New facts can make a failed investment worth reconsidering. Ackman’s experience also shows how difficult it is to choose the right moments to buy and sell an individual stock.
Ackman’s costly first bet on Netflix
Ackman first jumped into Netflix (NASDAQ: NFLX) in January 2022 (4), investing more than $1 billion after disappointing subscriber projections sent its shares lower.
Just three months later, Netflix reported that it had lost 200,000 subscribers during the first quarter. It was the company’s first subscriber decline in a decade and its stock plunged 35% in a single day.
Ackman sold all 3.1 million shares, locking in a loss of more than $400 million.
“We have lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty,” he wrote at the time (5).
That’s why it’s so important to stay informed. When new information can overturn a billion-dollar investment thesis, having reliable research at your fingertips can help you decide whether the facts still support your own picks.
Moby offers expert research and recommendations to help you identify strong, long-term investments backed by advice from former hedge fund analysts.
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