Fund Manager Bill Ackman’s Pershing Square Sells Netflix Stake; “We Have Lost Confidence In Our Ability To Predict Future Prospects”

deadline.com:

Bill Ackman’s Pershing Square Holdings, which made a high-profile purchase of Netflix shares in January after a dip in the stock price, said it sold the stake today, having “lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty.”Pershing’s portfolio “requires a high degree of  of predictability in the businesses in which we invest,” Ackman said in a letter to shareholders.Read it in full below.Pershing losses from its investment in the streamer reduced the fund’s year-to-date returns by four percentage points.Netflix stock plunged 35% today as investors bailed following a weaker than expected quarterly report and forecast on Tuesday that showed subscriber growth slowing and no immediate fixes.

The woes of the streaming leader could have ripple effects across the sector.Netflix lost 200,000 subs in the first quarter and anticipates a dip of 2 million in the current quarter, citing an array of headwinds from macro factors to Smart TV rollouts to 100 million freeloaders who share other people’s passwords.The company is cracking down on password sharing and, in a big pivot, will launch a tier with advertising like most of its rivals have done or are planning.

That would lower the cost and diversify the revenue base but take a few years to get up and running.ACKMAN LETTER:Dear Pershing Square Investor:Today, we sold our investment in Netflix, which we purchased earlier this year.

The loss on our investment reduced the Pershing Square Funds’ year-to-date returns by four percentage points. Reflecting this loss, as of today’s close, the Pershing Square Funds are down approximately two percent year-to-date.While we have a high regard for Netflix’s management and the