Bill Ackman's Billion Dollar Netflix Mistake (And Why He's Back)
In a Nutshell
Ackman lost $400M (40%) on Netflix after buying near the 2022 peak, illustrating that even top investors make major mistakes with oversized positions. The stock now shows bearish technicals, decelerating growth, and 16% downside risk to $64, despite a 12% fair value upside to $87. Position sizing is the critical lesson—limit initial exposure and use strict risk management rather than relying on institutional validation.
These notes were generated by AI and may contain inaccuracies.
Bill Ackman added a new stock to his long-term position. Ackman has disclosed updated positions including Netflix, Visa, Mastercard, S&P Global, ICE, and ALC as long positions. The analysis focuses specifically on Netflix as an example to discuss both the pros and potential cons of the company.
Ackman first invested in Netflix in 2022 after the post-pandemic rally at the highs of $350 per share (pre-split). He invested approximately $1.1 billion into Netflix and sold it for a 40% loss within a few months, losing $400 million. This investment was made when his portfolio was approximately $10.3 billion, representing roughly 10-12% position exposure.
"No one is right 100% of the time. Not even these so-called market makers or huge hedge fund managers."
After taking the 40% loss on Netflix, Ackman invested in Google, which turned out well. During the same period, Netflix ran up 650% after he sold. Ackman stated that the lesson learned was that he felt better about trusting his intuition and making decisions regardless of the outcome.
The example illustrates the importance of position size management. A $1.1 billion position out of a $10.3 billion portfolio represented approximately 10% exposure. This demonstrates that even large institutional investors can take significant hits, and the key is understanding how much exposure any single position represents relative to total portfolio size.
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