(Pershing Square) Shares of Netflix Inc. rose up to 6% on Thursday after hedge fund investor Bill Ackman said he had bought more than 3.1 million shares in the company.
Ackman said Netflix carries an attractive valuation after the recent fall, betting on the company’s favorable subscription-based business model and top leadership.
The share purchase disclosure gave a vote of confidence in the shares of Netflix, which have fallen almost 50% since November and have been declining recently as the company announced slow growth in subscribers.
Despite the recent slowdowns, Netflix’s management has emphasized on the company’s long-term prospects, with a move from linear to TV streaming among the developments still underway.
The purchase now takes Ackman’s Pershing Square Capital Management among the top 20 shareholders of Netflix. The acquisition was funded by the unwinding of significant amounts of interest rate hedge, which gave the company about $1.25 billion.
NFLX: NASDAQ is up +4.78%.
