Bill Ackman's Billion Dollar Netflix Mistake (And Why He's Back)

Bill Aman just added a new stock to his long-term position. So, want to go ahead and break it down. What's going on, guys? It's Ricky. I really hope that you guys learned something new. And if you do, please consider dropping a thumbs up and subscribing if you feel like we're ended. So, a lot of you guys might or maybe might not be familiar with Bill Aman. Um, great investor, very um well-known. Does he have the best performance for 2026? Nope. We're going to talk about all of the good, all of the bad, but I just I want to kind of change things up, talk about something, you know, day trading aside, uh, for more of my investors, maybe swing traders, and just kind of like get the juices moving that aren't just talking about memory chip companies. Again, you guys let me know down in the comments section if you like videos like this. If you do, please consider dropping a thumbs up and subscribing if you feel like I earned it. With that being said, Bill Aman has disclosed and updated positions, right? You guys can see from Netflix, Visa, Mastercard, if I'm not mistaken, that's Mastercard. Yeah. S&P Global, uh, ICE, ALC, and these are all long positions. That being said, you know, one of the things that I wanted to kind of talk about is he kind of has a history behind Netflix. We're only going to talk about Netflix. I'm going to use it as an example. Again, I'm going to talk about the pros, the potential cons. I want you to share in the comment section not just why you would possibly want to invest into Netflix, but also if you have a specific reason on why you don't like Netflix, what you think we should be concerned about. If there are some areas of concern, share it. I would love to learn more down in the comment section. So, let's go ahead and jump into this. The first thing that I want to talk about is kind of the history of what Bill Aman has had with Netflix. And I think a lot of this is going to be very relatable for beginner investors, right? and or even if you are experienced a great reminder that everyone makes mistakes. Some people view these big hedge funds as invincible or as market makers. But guess what? Again, there's the conspiracy theories. And don't get me wrong, do I believe that they have a lot of influence, a lot of power. Yes. But no one is right 100% of the time. Not even these so-called market makers or huge hedge fund managers. Bill Aman back in Netflix. He first invested into Netflix back in 2022 after the post-pandemic rally at the highs of $350 per share. That was pre-split. And this was right around $1.1 billion that he invested into Netflix. He sold it for a 40% loss within a few months after losing $400 million. So again that is a tough hit. I want to use this as comparison position size management for people like you and I. 40% first off that is huge. Like not just for us but for anyone 40% of a position is a big loss. 400 million is a lot of money. Shoot you and I would be I don't know can't can't even relate to that. With that being said position size management matters. Bill Aman. For those that do not know, again, I wanted to use it as a reference. When it comes down to his portfolio, these are some of his top holdings. And we're actually going to be using Investing Pro as the software to do a deeper fundamental analysis. If you want to do this with me, it's the first link in the description down below. You can download Investing Pro and do it with me as well. So, one of the things that I want to show you is a little bit more about um his position on Netflix. If you actually go and go under ideas and you search up Bill Aman, we can actually pull it up right here. And this is one of his portfolios. And what we can see is in the past 5 years, his overall performance, the recent one-year performance, not the best. Again, I wanted to talk about that. But I also wanted to show his holdings. His holdings is to be 13 almost 14 billion. So again, this is his current holdings. If we look back in the past 5 years, this is obviously something that we're taking into consideration uh from that big hit that was taken before that big hit was actually taken. He was right around $10.3 billion. Again, the reason I'm talking about this is due to position size management. $1.1 billion to you and I is a dream. It's a goal, right? But people often forget it's well how much exposure is that for him, right? You might be investing with 10,000 or a,000 or 100,000, right? I don't know what you invest in. Uh, same thing for me, right? I'm investing with a certain dollar amount. Sometimes when I take a position during my live trading session and I take a small position of like $25,000, a beginner might see that and be like, "Oh my gosh, $25,000. That's more than my account." That's your small position. Again, we all have 100% to work with, but it's how you position yourself uh yourself into a position that is very important. So although he did take a huge hit, 40%. If we do the math at $10.3 billion a $1.1 billion on single exposure stock I mean it's still risky but again position size management 1.1 out of 10.3 okay now we're talking a little bit more than 10%. What would that look like for you? Again I'm not undermining his mistake. His mistake is obviously still present. Uh, and it goes even further talking about after he took that 40% loss, he invested into Google, which turned out well for him. But nonetheless, during that same time, Netflix ran up 650%. Again, during that steep downturn, if I'm not mistaken, uh, that it took in 2022, right? It's very easy to look back and be like, yeah, he sold at one of the worst times and then it had a huge rip up. How many of us have made that mistake? This is why I wanted to make the video because even at the highest level, Bill Aman billions of dollars under management. I think his AUM is actually closer to 20 to$30 billion. But when it comes down to this specific portfolio, this was around, you know, 10 billion at the time, now right around 13 to 14 billion. With that being said, he sold at one of the worst times. It ran up 600%. How many times have you made that mistake? Now, one thing that he shared that I think is important to take into consideration, but again, every investment, every trade is different. At the time, he said that the lesson he learned from the experience was that he felt better about trusting his intuition and making decisions regardless of the outcome. So again, at the end of the day, you have to manage and mitigate risk. And if that just happens to be when you cut losses shortly after it takes off and goes completely against you. Again, if you think that these market makers are against you, if it hap if it can happen to Bill Aman, again, it can 100% happen to you. Not because anyone's against you. No one's targeting your $5,000 or $10,000 position, right? Maybe they were targeting him. That's a different story. But for people like you and I, I don't want to say that we're not targets. It's just you really think that they would move billions of dollars in market cap if you're buying shares to to liquidate your $5,000 position. Like, let's be realistic, right? Focus on what you can control. Investing in good quality companies when it makes sense. There's no question that in 2022 he might have gotten a little greedy, right? Had a really strong rally. He went in again to his defense with 1.1 billion. His account is over 10 billion under management according to what we've learned from investing pro. And with that being said, 10 to 12% position. It's not the most aggressive, but obviously taking a 40% hit on that position. We can always look back and be like, what could we have done better right now that it sold off, it saw that return, it ran up to highs of 134. Now, based off of after that, you know, split that it did, now it's ran down to lows of 65. It's not that it has to bounce here, right? Because obviously based off of what we saw in mid to late 2022, it definitely has potential to sell off even further, right? Right when it got cheap, it got cheaper shortly after. The same thing can happen here. It's been forming lower highs, lower lows. It looks like it recently, I'm not too sure if it's just because of Bill Aman and or because it recently reported earnings, but it's had a nice little uptick, but I want to remind you direction overall is still incredibly bearish. Strong lower highs, strong lower lows. But when you look at the company fundamentally, again, jumping on over to Investing Pro, pulling up Netflix. Again, this is one of my favorite things about this platform is that we're not just focused on technical analysis, which I think can be useful, but when you're investing into companies, you want to understand the deal that you are either paying for or trying to take advantage of, or maybe it's expensive, right? Like Palunteer trading at over 200 times its earnings. I would never know that just by looking at the stock, but I would know that when doing a fundamental analysis. So, looking at Netflix, you can see that based off of fair value, uh, there's 12% upside. Based off of analyst targets, it has a price range of right around $94. Currently sitting at an average of 87 if I'm not mistaken. Current price is 78, fair value is 87. U P ratio is 23.8 times its earnings. Not very expensive. you know, we're we're very close to that 20p ratio. P ratio is the premium that you're pretty much paying to own that company. The example that I can give you is I'm talking about Palunteer, right? I want to use that as an example. Palanteer, in my opinion, is an expensive stock. You're paying a big premium. If you look at it, it's trading at over 138 times its earnings. Meaning from what the company is currently valued at, what people are, you know, willing to pay right now for Palenteer, which in my opinion is overvalued, to what the company actually earns as a company, $3 billion. But if you look at Palunteer and you pull it up very quickly, you would quickly find out that Palunteer has a $418 billion market cap, but yet it only makes $3 billion in revenue. Again, big premium. That's okay, right? Because when market sentiment and direction are in your favor, markets can stay irrational longer than we can stay solvent. So, it doesn't mean that you need to short it. Not you guys, maybe me. But with that being said, in a very short period of time, it went from lows of 120, huge gap up to previous resistance levels right around 190. In my opinion, I think it's overbought, overvalued within a short period of time, and probably only a matter of time for it to correct. That's a conversation for another time. Right now, we're focused on Netflix. And again, you can never time the perfect time to invest in a company. But the idea that we can take from Bill, right, is we can do our part in choosing to invest in increments with proper position size management just like he did, right? That we want some exposure, not all, especially when we know things can get worse before they get better. When we think that it's relatively cheap, right? 23.8 8 times its earnings. Revenue is 48 billion and 13.6 billion uh in net income. Net income is growing. Revenue is growing. And if we click on pro research, one of my favorite things to look into, again, you get a deeper understanding of what this company is actually doing. This is its revenue quarter after quarter. Absolutely beautiful. I like to scroll down and, you know, if you want to spend some time looking at their LTM financial models, Q2 financials, see how they spend and and, you know, um, earn their money, uh, and the breakdown behind that. I think that can be very useful. Most people like to focus on the bull case. I don't. I like to focus on the bare case. I want to be aware of what my risk are. That's just my take. That's just my approach. I think everyone is always so fixated on it has to go up. But again, no, it doesn't. Protect your downside, conserve capital, right? Shares fell 8.58% after market hours after Q2 results, dropping below 52- week lows below $70 as investors reacted to negative negatively to decelerating FX neutral revenue growth, 11% in Q2 versus 12% in Q1. Um, and then guidance implying the weakest revenue growth in three years. So again, I need to make myself aware. So if there's something that is being disclosed that is of concern or I see there to be hey that's going to be a problem that might be a problem in the up and cominging quarters maybe I do want to wait right that's great that bill decided to buy now but I added it to my watch list this is of concern to me now I'm aware of it so maybe I just add it to my watch list set appropriate alerts and follow up with it maybe once they begin to fix that issue or to see if it begins to actually um not negative negatively impact the market or the stock as much as you originally expected, right? Netflix loss lost bids to acquire Roku uh to Fox Corporation's 20 billion offer. The stock carries a beta of 1.51, reflecting significant price volatility. It's been very very volatile lately, intensifying competition from Amazon, Apple, Disney Plus, and YouTube, many of which can sustain streaming losses for broader ecosystems combined with consumer subscription fatigue poses a persistent threat to pricing power and subscriber loyalty. So again, I love that because again, you shouldn't be convinced to just only focus on the pretty picture of what it can be. You need to be realistic and be aware of the downside. So when they actually do begin to present themselves, you're not surprised. You're like, I was aware of this is this was an issue and that is why I only went in with maybe 5%, right? Or less than 10%. I wanted some exposure, but because of the bare case and what I was aware of, now I can make a more informed decision on how much exposure I want in this opportunity. Right? And again, I'm only able to do that if you do a deeper fundamental analysis. So, I thought it was a good time to talk about it. Now, do I think that he bought maybe at a decent time? Sure, he bought maybe at the highs of 60s, maybe low 70s. Right now, it's running at 78. If we take into consideration where it used to trade at from highs of 134 to current lows of um what is it? 78 to be exact, that does offer right around 71% upside. So again, very attractive upside, but like you know, I like to not just talk about upside. I like to pay attention to downside. What's the worst case scenario? Well, what if the stock does continue to fall? Based off of recent lows, it has 16% of downside. Do the math, right? If you're not part of our LPP team, don't worry. You can still use our risk calculator. What we mean by that is anytime that you're thinking about taking a trade, plug it in to our risk calculator. So, you can do custom. Let's say that you're thinking about investing into Netflix. Let's say that your desired entry price is going to be, hey, I'm just going to buy some right now. Maybe you wanted to go in aggressive, right? Um, and your stop is going to be if it ends up making you lows, which is going to be right around 640. And your goal is obviously uh for it to go up to 130, right? Or maybe not, right? You you can decide. So 60 440. And then price target is going to be 134 if I'm not mistaken. Yeah. So, we can go ahead and plug it in, and it's going to do the math with about 100 shares. You can adjust the shares depending on how much exposure you actually want, but with, you know, 10,000, uh, I'm sorry, 100 shares, that would be equivalent to a dollar amount invested of right around $7,000, uh, or 7,800 to be exact. So, again, you can play with it. If you have like $10,000 to work with, you know, 100 100 shares at 7,800 would be a decent position size. Kind of aggressive initially and you can do the math. Hey, I could potentially lose, you know, $1,300 if it ends up making new lows. And remember, it's a strong consistent descending pattern. It has been. It's a recently going up, but the market's been going up, right? It went up after uh possibly reporting earnings, maybe after the news that Bill Aman invested into it, but it's gone up before. but it produced another leg down and that may need new lows, right? Something to consider. So, is it worth the risk of going in so aggressive with a 100 shares if you had, you know, $10,000 to work with? Maybe you want to reduce your exposure and you're like, okay, well, what about 40 shares? Okay, you know, worst case I lose 500 bucks. You know, that would suck, but maybe it's manageable for you. But best case, 2,200. And you can always add more to it when direction becomes favorable, right? You can work with this, mess around with it, and depending on when you get to that pretty dollar amount of I I respect and accept the risk because of how much it can potentially yield in profit. That's what I think would make the most sense. And then of course, it shows you the riskto-reward ratio, which I think is super important. making sure that you're only taking advantage of either trade opportunities or investment opportunities that properly yield greater potential profit than they do risk. Again, something that we always talk about within our LPP lesson live whenever it is that you guys are ready. If you guys ever want to watch me trade live, I do it every morning right at market open. You can even preview a recent live session to get a taste of what it's like before you actually join. And that's the second link in the description down below. But with that being said, again, that's our breakdown on Netflix. I like the company. I could entertain the idea of investing into it. But position size is going to be very, very crucial. I cannot expect that all of a sudden just because I bought it and Bill bought it that it's now magically going to begin to uptick. If, again, based off of the bare case and or just market sentiment, if it continues to get worse, then so can Netflix. And that's definitely something that you have to take into consideration with risk management, but also position size management, right? Just like we talked about. So, very excited to follow up. I hope that you guys enjoyed this video. If you guys did, please consider dropping a thumbs up and subscribing if you feel like we're in it. Other than that, I appreciate you guys' time. Like always, let's make sure that we end the year on a green note. Take care, team.