Name this stock:
- It's a household name
- It has an astronomical Price/Earnings ratio and huge short base
- The stock is notoriously volatile
- Wall Street gives it the benefit of the doubt despite the company's reliance on going into unfamiliar businesses to achieve growth
- The stock has been a massive winner over the long haul
Whitney Tilson, managing partner at Kase Capital and author of The Art of Value Investing, says you're forgiven if you guessed Amazon.com (AMZN), but these bullet points are part of his case for owning Netflix (NFLX). Tilson has a checkered history with Netflix having publicly "lost a lot of money" shorting the company based on a thesis he laid out for SeekingAlpha.com in December of 2010.
Tilson covered his short just months later, explaining in great detail why he did so. Ironically the stock was close to where it is today, having fallen from highs of about $300 in July of 2011 and bottoming the $50's a year later.
Spirit unbowed Tilson got long the stock ahead of the latest super-spike. He thinks NFLX shares have more room to run.
"It's easy to say 'I missed it,'" Tilson notes in the attached video. As far he's concerned taking a pass on shares because they've gone up 4-fold in the last year would ignore reasons the stock is comparably cheap compared to other companies billing customers on a monthly basis. "They're trading at $400 per subscriber in a world of $1,000 per sub (valuations)."Read More »from Netflix Is Still Relatively Cheap: Tilson