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Tiger Global hedge fund invests $1.6bn in Netflix

Sat 15 Aug 2015

Netflix logo over image of remote control being used

In the second quarter of 2015 Chase Coleman’s hedge fund Tiger Global Management bought around “one (point six) billion dollars” ($1.6bn) worth of additional shares in the internet streaming giant Netflix, based on the share price of $656.94 at the end of that quarter. Tiger Global increased its stake in Netflix from 155,877 shares at the end of the first quarter, to 2,571,039 shares at the end of the second quarter, making it the largest holder of the company’s shares among hedge funds. At the end of the second quarter, Tiger Global’s stake in Netflix was valued at $1.7bn.

On July 15, Netflix’s stock was split seven-for-one, meaning that one old share effectively became seven new shares. On the assumption that Tiger Global is keeping its stake, it now has 17,997,273 shares.

However, there’s a caveat to Tiger’s bullish outlook on Netflix. As Benzinga reports: “On the other hand, the two largest investors in Netflix as of the end of the first quarter are now moving away from the company. Over the quarter, Carl Icahn sold all of his 9,883,482 shares, while Philippe Laffont’s Coatue Management got rid of 83% of its stock, keeping only 2,006,095 shares – still a sizeable position.”

Tiger Global also made significant investments in other companies, such as JD.com Inc., where it more than doubled its number of shares, bringing the stake to $2.4bn at the end of the second quarter. However, since then, the shares have gone down by 18 per cent.

They also made new investments, such as $324.3 million in Amazon.com Inc., and $106.5 million in TripAdvisor Inc.

In addition, Tiger Global sold their $568.7 million stake in Twenty-First Century Fox Inc., marking their biggest exit of the quarter. Viewed alongside the firm’s acquisition of so many more Netflix shares, this marks a clear transition from traditional to new media models of production and distribution.

Netflix spans 50 countries, comprising 62 million members watching over 100 million hours of film and TV content each day – making Netflix the largest source of internet traffic in North America, accounting for a huge 30% of prime-time bandwidth.

The streaming service is increasingly moving into producing its new content, partnering with the likes of Dreamworks Animation for Dragons: Race to the Edge, and Marvel Studios for a deal spanning four series and a miniseries, among many others. It’s even been rumoured that Lucasfilm could join forces with Netflix for up to three live-action Star Wars TV shows.

Overall, the future looks optimistic for Netflix. It’s has even been predicted to become a $100bn market cap company, and in fact recently reached $50bn, halfway to attaining this milestone.

Of course, since the filings are published up to 45 days after the end of the quarter, all of these share details could have changed in the meantime.

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