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By Sam Boughedda
Investing.com — Netflix Inc (NASDAQ:NFLX) shares are up more than 8%, one day after Pershing Square capital revealed in a letter to investors that it bought 3.1 million shares in the subscription-based streaming service since last week.
Pershing's founder and CEO, Bill Ackman, said that makes them a top 20 shareholder in the streaming giant.
"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. Netflix's substantial stock price decline was further exacerbated by recent market volatility," read the letter.
Ackman cited Netflix's "highly favorable characteristics," which included its subscription-based, highly recurring revenue, its management team, industry-leading content, pricing power, substantial margin expansion and improving free cash flow as reasons for the investment.
"We are all-in on streaming," he declared.
Pershing funded the purchase by unwinding the substantial majority of its interest rate hedge, generating proceeds of $1.25 billion.
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