Netflix today reminds us of BP 16 months ago (which was a huge winner for us): the company, its CEO and the stock are all universally hated right now, with endless headlines of furious customers and shareholders. Given our unsuccessful timing of being short this stock – a highly frustrating experience – it wasn’t easy to overcome the emotional baggage and think about Netflix with a fresh perspective, but we’ve concluded that it’s an excellent company and that the market has over-reacted to all of the recent negative news, thereby providing us the chance to own it at a cheap price. Netflix We established a position in Netflix near the end of the month on the day the stock crashed 35%. Tax Estimates Please email or call Kelli at or (212) 386-7160 if you would like to receive your tax estimates as of the end of October, which will be available in mid to late November. There were two winners of note on the short side, Green Mountain Coffee Roasters (-30.0%), which tumbled after the presentation by Greenlight Capital’s David Einhorn at the Value Investing Congress (see: 7th-annual-new-york-value-investing-congress.html), and First Solar (-21.3%).
Our short book offset nearly half of our gains on the long side due to Ethan Allen (45.5%), Boyd Gaming (32.2%), Philips-Van Heusen (27.8%), Nokia (18.9%), and (16.5%). The only loser of note was Iridium warrants, which fell 11.8%. Penney (19.8%), Goldman Sachs (15.9%), Howard Hughes Corp. Our long book outpaced the market in October, led by SanDisk (25.6%), Citigroup (23.3%), J.C. Our fund’s performance during the month was roughly in line with what we would expect given that it is nearly 70% net long. +1.3% for the S&P 500, 5.5% for the Dow and 1.9% for the Nasdaq. 10.9% for the S&P 500, 9.7% for the Dow and 11.2% for the Nasdaq.