By Svea Herbst-Bayliss

BOSTON, (Reuters) –Billionaire investor William Ackman purchased a stake in Netflix Inc (NASDAQ) that is worth over $1 billion. The new share was acquired after the stock market plunged last Thursday.

Ackman informed investors that Pershing Square Capital Management started to buy Netflix shares on Friday. This makes Pershing Square one of the top 20 shareholders.

Ackman wrote to clients praising the company’s management team. On Twitter (NYSE:), the manager stated that he had long respected Reed Hastings, the CEO of Netflix and the “remarkable” company he and his staff have created.

In after-hours trades, Netflix shares rose as high as 5% The shares had fallen more than 30% over the past five days. This is a steeper drop than in the wider market. Netflix predicted weak subscriber growth after the market closes last Thursday.

Ackman wrote that his firm invests $22.5B in Netflix and had also been studying Netflix.

We are now streaming with UMG as well as Netflix because we love these business models and industry contexts and the amazing management teams that run them.

Ackman stated that the company unwound large amounts of its interest rate hedge, which yielded profits of $1.25billion to raise cash for the Netflix acquisition.

His performance would have been much better if he hadn’t sold the hedge. Pershing Square Holdings suffered a 13.8% loss in January’s first three weeks, which was the worst start of a year by the manager for many years.

Ackman recorded a loss of 26.9% last year, following a 70.2% increase in the fund’s value in 2020.

Ackman explained that Netflix is benefiting from high-recurring revenues. He also added that Netflix has pricing power, which allows it to deliver industry-leading content.

Pershing Square has traditionally held a limited number of investments, which include Lowe’s (NYSE :), Chipotle Mexican Grill(NYSE :), and Dominos Pizza Inc.

These companies, he said, are quality businesses and can endure inflationary pressures. They are also able to price their products so that profits are not lost.

Netflix’s stock price soared in the wake of the pandemic, when live performances were cancelled and movie theatres were closed.

This company is a favourite of prominent investors. Ackman was an activist investor who bought a 10% share of Netflix about a decade back. Ackman thought that Netflix might have to be sold to technology companies because its shares were so undervalued. Ackman who is known for pushing other companies to succeed seems to view this as an opportunity to invest with friendliness. On Twitter, he said that he was delighted by the opportunity presented to him by the market.