Why Carl Icahn's Decision to Cash In on Netflix Shouldn't Worry Investors

Let's look at what was really behind this guru's decision to sell.

Feb 27, 2014 at 11:19AM

In August 2012, shares of Netflix (NASDAQ:NFLX) were struggling, and investors couldn't seem to find the exit fast enough.

After surging to more than $300 per share by the middle of 2011, the company's stock dropped more than 80%. Customers were up in arms over a poorly executed price hike, and the video streamer made the ill-fated decision to spin off a Qwikster DVD service, only to take it back a few days later.

That's when famed investor Carl Icahn decided to start buying up shares, eventually amassing ownership of nearly 10%.

We already knew that Icahn sold a large chunk of his shares back in October, but after he filed his holding company's 13F document with the SEC, it seems he's still a big believer in Netflix. Read below to find out why.



Investors should never decide to buy or sell a stock based on what one investor is doing, even if that investor is Carl Icahn.

But for those worried that Icahn didn't believe in Netflix anymore, he addressed his reasons for selling head-on: "As a hardened veteran of seven bear markets, I have learned that when you are lucky and/or smart enough to have made a total return of 457 percent in only 14 months it is time to take some of the chips off the table." 

Now we know for sure that Icahn meant it. As it stood on Dec. 31, his holding company still owned 2.7 million shares of Netflix, worth roughly $1.18 billion.

That stake is worth considerably more just two months later, likely in the ballpark of $1.22 billion. That's because Netflix added 2.33 million domestic subscribers at the end of 2013 and just announced a deal with Comcast (NASDAQ:CMCSA) to ensure that subscribers won't have to deal with slow and sputtering streaming feeds, which could prove deadly for Netflix as it becomes more popular.

Investors should stay tuned when Icahn files his next 13F to see if he still feels as lucky to be holding shares after the recent run-up.

Imagine buying Netflix at $11.30
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Brian Stoffel has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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