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Why Bill Ackman Sees More Play in Netflix Stock

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Bill Ackman’s Pershing Square took a large stake in Netflix with an eye to a recovery in the streaming giant’s shares.
Patrick T. Fallon/Bloomberg

One pandemic play that has been laid low could be ready for a comeback. That’s the assertion of activist investor Bill Ackman, whose Pershing Square scooped up 3.1 million shares of Netflix and became a top-20 shareholder in the streaming giant.

While investors and analysts bailed on Netflix (ticker: NFLX) stock earlier this month after the company disclosed weaker-than-expected subscriber figures, Ackman bought shares, finding much of the Street to be shortsighted.

So far, the investment appears to be working. Netflix stock has climbed 5% since Ackman’s made the stake public late on Wednesday. The shares are still down 37%, year to date. “Many of our best investments have emerged when other investors…discard great companies at prices that look extraordinarily attractive,” Ackman wrote in a letter to investors.

Netflix didn’t respond to a request for comment.

It has been four years since Ackman last ran a proxy fight; he now seems to prefer engaging behind the scenes with companies. His $1 billion investment appears passive for now—he cited Netflix’s improving cash flows as a reason to be bullish on shares. Pershing began research on the company while making an investment in Universal Music Group in 2021.

“We believed the opportunity to invest in Netflix at current prices offered a more compelling risk/reward and likely greater, long-term profits for the funds,” wrote Ackman.

Write to Carleton English at carleton.english@dowjones.com

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