The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Netflix, Inc. (NASDAQ:NFLX).
Is Netflix (NFLX) stock a buy or sell? Hedge funds were in an optimistic mood. The number of bullish hedge fund positions rose by 12 recently. Netflix, Inc. (NASDAQ:NFLX) was in 116 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 114. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NFLX ranked 14th among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 104 hedge funds in our database with NFLX holdings at the end of September.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Bill Miller of Miller Value Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks 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 (or at the end of this article). Now we’re going to take a glance at the recent hedge fund action surrounding Netflix, Inc. (NASDAQ:NFLX).
Do Hedge Funds Think NFLX Is A Good Stock To Buy Now?
At Q4’s end, a total of 116 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NFLX over the last 22 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Netflix, Inc. (NASDAQ:NFLX), which was worth $1999.5 million at the end of the fourth quarter. On the second spot was Lone Pine Capital which amassed $1325.9 million worth of shares. SRS Investment Management, Matrix Capital Management, and Eagle Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SRS Investment Management allocated the biggest weight to Netflix, Inc. (NASDAQ:NFLX), around 21.87% of its 13F portfolio. Matrix Capital Management is also relatively very bullish on the stock, setting aside 11.7 percent of its 13F equity portfolio to NFLX.
Now, some big names were breaking ground themselves. Melvin Capital Management, managed by Gabriel Plotkin, assembled the largest position in Netflix, Inc. (NASDAQ:NFLX). Melvin Capital Management had $216.3 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also initiated a $131.9 million position during the quarter. The other funds with brand new NFLX positions are Jeff Lignelli’s Incline Global Management, Bill Miller’s Miller Value Partners, and Brennan Diaz’s Fernbridge Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Netflix, Inc. (NASDAQ:NFLX) but similarly valued. We will take a look at Intel Corporation (NASDAQ:INTC), The Coca-Cola Company (NYSE:KO), Comcast Corporation (NASDAQ:CMCSA), Merck & Co., Inc. (NYSE:MRK), Bank of America Corporation ((NYSE:(BA))C), Pfizer Inc. (NYSE:PFE), and AT&T Inc. (NYSE:T). All of these stocks’ market caps match NFLX‘s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INTC,72,5578824,6 KO,62,24683372,2 CMCSA,84,8831767,2 MRK,82,7171072,2 (BA)C,99,35340008,11 PFE,63,1848417,-3 T,58,1045081,7 Average,74.3,12071220,3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 74.3 hedge funds with bullish positions and the average amount invested in these stocks was $12071 million. That figure was $15633 million in NFLX‘s case. Bank of America Corporation ((NYSE:(BA))C) is the most popular stock in this table. On the other hand AT&T Inc. (NYSE:T) is the least popular one with only 58 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 93.5. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Unfortunately NFLX wasn’t nearly as successful as these 30 stocks and hedge funds that were betting on NFLX were disappointed as the stock returned -4.2% since the end of the fourth quarter (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Disclosure: None. This article was originally published at Insider Monkey.