T2 Partners on NFLX

Via Neo-Alpha, T2 Partners have given brief reasons for being long NFLX. They compare the balance sheet but only mention the contract obligations as necessary for growth. They cite 166million net cash and 201million fcf as strong positions, but this is up against these streaming content obligations:

Less than one year		$	740.8
Due after one year and through 3 years			2,136.9
Due after 3 years and through 5 years			535.7
Due after 5 years			45.5
Total streaming content obligations		$	3,458.9

These are up massively compared to prior periods.

Hey, maybe they'll pull it off. I hope they do, I had a great experience as a customer. I agree it looks good from a takeover perspective. But I wouldn't call that a strong balance sheet. (ok so technically it's off balance sheet...)

NFLX - Two Mistakes

I don't like NFLX even at the current price. The reason is the massive operating leverage they've taken on to maintain and expand their digital offerings. I suspect it has positive expected value, but definitely risky, so inappropriate for my situation.

1) First mistake was buying a small position after the huge drop, while starting researching it. I was thinking that there was significant overreaction - and likely many stop outs from the momentum players - and it would soon bounce back up. I had a wee bit of confidence because I'd looked over NFLX last December. Not enough to hold it over night, but I still shouldn't have done it - the situation had materially changed with their increased obligations.

Of course go figure with investing and speculating, I made money despite making a mistake. I would have made more if I hadn't fixed the mistake right away (now up over 10%).

2) I looked at NFLX in December from the short side. I should have kept up with it; if I'd read all their filings, I would have noticed the increased operating leverage, and been willing to short after the stock started dropping with the rebranding fiasco.