Key points
- Bill Ackman is one of the most famous fund managers in the world
- He runs Pershing Square Capital Management
- Now, it seems he is 'buying the dip' during this latest market correction
As most of us would be aware, the past month or so has not been a fun one to have money in the markets. Even though the S&P/ASX 200 Index (ASX: XJO) is still in the green today, it remains down by roughly 9% so far in 2022. The US markets have faired even worse. The S&P 500 (SP: .INC) has lost 9.8% since the start of the year, while the Nasdaq-100 (NASDAQ: NDX) has seen its value drop by more than 15% over the same period.
So because all of these markets have dipped below 10% of their most recent all-time highs this week, we can now arbitrarily call this dip a 'correction' by the conventional investing playbook.
Market volatility and corrections can be an extremely stressful time for many investors, and fair enough. It's never fun seeing the assets you've bought with your hard-earned cash get hammered so decisively, and over such a short span of time.
But some investors are taking advantage of this volatility to load up on shares at some cheap prices. One appears to be Bill Ackman. Ackman is a US-based fund manager who heads up Pershing Square Capital Management. Now a billionaire, Ackman is also one of the most famous fund managers in the world. So it goes without saying that this is an investor that might be worth paying attention to, especially in these uncertain times on the markets.
Top fundie Ackman 'buys the dip' with Netflix
Well, it appears Ackman is 'buying the dip' as it were. According to reporting in the Australian Financial Review (AFR) this week, Ackman has seized on the huge drop in the Netflix Inc (NASDAQ: NFLX) share price we've recently seen. Between 20 and 26 January, Netflix shares lost around 30% of their value. That put the company at pretty much 50% off its all-time high that we saw only back in November. This move seemed to have been sparked by Netflix's most recent quarterly results, which detailed a slowdown in new subscriber growth for the company.
But according to the AFR report, Ackman's Pershing Square has taken full advantage of this dip. The firm is now reportedly a top-20 shareholder of Netflix, which has a market capitalisation of US$171.29 billion.
Here's why Ackman said he swooped:
The opportunity to acquire Netflix at an attractive valuation emerged when investors reacted negatively to the recent quarter's subscriber growth, and management's short-term guidance… We are all-in on streaming.
So that's how one top investor is handling the volatility we have seen recently – by picking up large chunks of a favourite investment. Something to consider if we see things stay choppy for a while!
