Ackmans fund likely feeling the Netflix pain as shares plunge

div classBodysc17zpet90 cdBBJodivpBy Svea HerbstBaylissp

pBOSTON Reuters – Three months ago hedge fund manager William Ackman cheered when Netflixs stock price suddenly dropped, buying up 3 million shares as other investors fretted over weak subscriber growth at the streaming company.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pOn Tuesday, the billionaire investors hedge fund, Pershing Square Capital Management, was likely nursing losses as Netflix shares tumbled 26 in afterhours trading after the company reported losing subscribers for the first time in a decade.p

pAckman, who routinely moves stock prices by buying into or exiting a company, did not say how much he paid for his Netflix stake, which he unveiled to his investors on Jan. 26. But he did say that he began acquiring the stake on Jan. 21, the day after Netflixs announcement sent its stock plunging.p

pFrom Jan. 21 through Jan. 26, Netflix shares traded in a range of 351.46 to 409.14. The 26 drop in Netflix shares in afterhours trade on Tuesday, bringing them to 257.98, would imply a loss for Ackmans fund on the Netflix investment of roughly 26 at the low end and a loss of 37 at the high end.p

pBefore Netflixs January outlook its stock had been trading around 500. Indeed, its shares had been dropping for months and Ackman called them “undervalued.”p

pFor Ackman, the drop, while unwelcome, may not be entirely unexpected as he had warned his investors earlier this year that Netflix would face “nearterm variability” in quarterly growth and profitability. Long term, however, he said he expects to see doubledigit annual revenue, expanded operating profit margins, and earnings per share growth of more than 20 a year.p

pA Pershing Square spokesman declined to comment.p

pThe Pershing Square Holdings fund was already nursing small losses through the end of March before Netflix shares dropped on Tuesday, which likely pulled returns down even more. But these returns stand in stark contrast to three years of high doubledigit gains for the fund that includes a 70.2 rise in 2020.p

pThe firms assets now total 21.5 billion, including permanent capital in which wouldbe sellers can exit only if there are new buyers. This allows Ackman to worry less about potentially jittery investors wanting out and having to sell positions to meet redemptions.p

pAckman has weathered big slides before, including when shares in fastfood chain Chipotle cost his fund some 145 million in value in late October 2017. He joked in an interview with Reuters at the time that his investment team would be eating Chipotle until the stock price returned to 500 a share. On Tuesday, Chipotle closed at 1,632.03p