Trading stocks is tough, don’t let anyone tell you otherwise. Even the best have nightmare days. Today’s example would be billionaire Bill Ackman, CEO, and founder of Pershing Capital, a notorious hedge fund. With an MBA from Harvard Business school and 20 years in the business, he is a real pro. His fund generated approximately 70% returns in 2020 alone. This is remarkable considering this firm currently holds about $20B in assets under management.
At the start of the year, Netflix was down significantly from its highs. Ackman took this opportunity to accumulate shares, approximately 3.1M shares worth over $1B. The stock pulled back for roughly+20% gains. He looked like a genius.
However, yesterday after the bell, Netflix announced its quarter one earnings. It was not pretty. In this report, the company exceeded earnings expectations by 20% BUT it was their first-time instance of subscriber loss which was roughly 200,000. The company expected to add over 2M subscribers in this period. As a result, the company tanked roughly over 30%.
Quick Math
Invested = $1.1B (3.1M @~370)
Current = $685M (3.1M @~222)
Single Day Loss = $387M (3.1M @ 125)
Total Loss = $435M
So if you are having a bad day, you probably are not having as bad of a day as Bill Ackman, who has lost almost half a billion worth of his and his client’s money. This is a friendly reminder that even the pros have massive down days. Additionally, just because a security’s price has decreased significantly it doesn’t mean it can’t keep going down. #TrendIsYourFriend. Learn from other mistakes.
On another note, Howard Hughes Corp. ($HHC) filed a 13D, an SEC form required for ownership beyond 5%, which revealed that Pershing Square Capital owns 25% of the company. Should be interesting how this stock plays out in the near future.
At the start of the year, Netflix was down significantly from its highs. Ackman took this opportunity to accumulate shares, approximately 3.1M shares worth over $1B. The stock pulled back for roughly+20% gains. He looked like a genius.
However, yesterday after the bell, Netflix announced its quarter one earnings. It was not pretty. In this report, the company exceeded earnings expectations by 20% BUT it was their first-time instance of subscriber loss which was roughly 200,000. The company expected to add over 2M subscribers in this period. As a result, the company tanked roughly over 30%.
Quick Math
Invested = $1.1B (3.1M @~370)
Current = $685M (3.1M @~222)
Single Day Loss = $387M (3.1M @ 125)
Total Loss = $435M
So if you are having a bad day, you probably are not having as bad of a day as Bill Ackman, who has lost almost half a billion worth of his and his client’s money. This is a friendly reminder that even the pros have massive down days. Additionally, just because a security’s price has decreased significantly it doesn’t mean it can’t keep going down. #TrendIsYourFriend. Learn from other mistakes.
On another note, Howard Hughes Corp. ($HHC) filed a 13D, an SEC form required for ownership beyond 5%, which revealed that Pershing Square Capital owns 25% of the company. Should be interesting how this stock plays out in the near future.