John A. Thaler’s JAT Capital Management LP, the biggest holder of Netflix Inc. (NFLX) shares, lost 14 percent last month through Oct. 28, paring its 2011 gain by more than half after the stock plunged, according to two people with knowledge of the matter.
JAT, the New York-based global long-short hedge fund with $3 billion in assets, rose 13 percent this year through last week, said the people, who asked not to be identified because the information is private. JAT had climbed 31 percent through September as Thaler’s market-neutral stance and short positions drove returns.
Netflix, the mail-order and online video service, dropped the most in seven years on Oct. 25 after saying it lost 800,000 U.S. subscribers in the third quarter, more than the company expected, and predicting additional cancellations because of a price increase. JAT held 2.6 million shares of Los Gatos, California-based Netflix as of a Sept. 29 filing.
Steve Bruce, an outside spokesman for JAT, declined to comment on the fund’s returns. Long-short funds such as JAT aim to profit by betting on rising and falling stocks.
Thaler, 36, generally aims to hold long positions for two years and short positions for three to 12 months, three people familiar with the matter said last month.
JAT Capital most recently established a long position in Netflix in the first quarter of 2010 and bought more than 2 million shares in this year’s third quarter, according to regulatory filings by the firm. Netflix has declined about 73 percent since closing at a record high of $298.73 in New York trading on July 13.
Thaler founded JAT in 2007 after leaving Shumway Capital Partners LLC, where he most recently managed a portfolio of telecommunications, media and technology stocks. JAT has half its investments in those industries and half in consumer, industrial and gaming companies, the people said.
JAT gained 11 percent last year and 20 percent in 2009, according to a marketing document. The firm lost 5.9 percent in 2008 and 0.7 percent in November and December 2007.
To contact the reporter on this story: Kelly Bit in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Christian Baumgaertel at email@example.com