Bill Ackman buys 3 million shares of Netflix after recent sell-off, becomes a top 20 shareholder

Published Wed, Jan 26 20225:16 PM ESTUpdated Wed, Jan 26 20225:31 PM EST

Pershing Square's Bill Ackman revealed Wednesday evening that he purchased more than 3.1 million shares of Netflix following a steep sell-off in the streaming giant, making him a top-20 shareholder. "I have long admired Reed Hastings and the remarkable company he and his team have built. We are delighted that the market has presented us with this opportunity," Ackman said in a tweet Wednesday with an investor letter attached. Shares of Netflix jumped more than 5% in extended trading. The stock has suffered a sharp decline in the new year, however, down over 40%. Ackman said his purchase started last Friday and he kept buying over the last several days. "The opportunity to acquire Netflix at an attractive valuation emerged when investors reacted negatively to the recent quarter's subscriber growth and management's short-term guidance," Ackman said in the letter. "Netflix's substantial stock price decline was further exacerbated by recent market volatility." The streaming company saw its shares slump 21% last Friday after reporting a slowdown in its subscriber growth. Netflix added 8.28 million global paid net subscribers in the fourth quarter, fewer than the 8.5 million subscribers Netflix added in Q4 2020. Ackman said the investing theme in Netflix is in keeping with his big bet on Universal Music Group — both have a streaming business model. "Now with both UMG and Netflix, we are all- in on streaming as we love the business models, the industry contexts, and the management teams leading these remarkable organizations," Ackman said. Last year, the billionaire investor abandoned his SPAC deal to buy a 10% stake in Universal amid regulatory headwinds. His hedge fund assumed the share purchase agreement in the music label. To fund the Netflix investment, Ackman said his hedge fund unwound the substantial majority of its interest rate hedge, generating proceeds of $1.25 billion. "We are pleased to add Netflix to our portfolio," Ackman said. "Many of our best investments have emerged when other investors whose time horizons are short term, discard great companies at prices that look extraordinarily attractive when one has a long-term horizon."

Bill Ackman, founder and CEO of Pershing Square Capital Management.

Adam Jeffery | CNBC

Pershing Square's Bill Ackman revealed Wednesday evening that he purchased more than 3.1 million shares of Netflix following a steep sell-off in the streaming giant, making him a top-20 shareholder.