American hedge fund manager and billionaire investor Bill (William) Ackman has sold Pershing Square’s entire investment in Netflix, purchased only earlier this year, at a loss of roughly $400 million. The reason for the sale was the decline in subscriber base of Netflix and consequent modification in the OTT platform’s business model. Ackman said, Pershing Square Funds invests in only those companies which have a high degree of predictability in the businesses, due to the highly concentrated nature of the Fund’s portfolio. He said, “While Netflix’s business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty.”
It may be mentioned here that Pershing Square acts promptly when it discovers new information about an investment, that is inconsistent with its original thesis. That’s what it did in the case of Netflix.