Hedge fund legend Leon Cooperman has some surprising things to say about Netflix, Inc. (NASDAQ:NFLX) in his latest interview with CNBC. The famed investor said the video streaming service, which has a market cap of around $41 billion, is likely to be taken over.
“I think ultimately Netflix is going to work, but I think somebody buys the company at a nice premium,” the billionaire investor said. “Netflix is an acquisition candidate for somebody.”
In his Wednesday interview, Cooperman said there was no particular reason for selling the online streaming service other than he is “doing other things.” Cooperman, who is the CEO and chairman of an investment firm, noted that the time is fast approaching when banks can turn meaningful profits and he decided to set his money to work elsewhere.
“We have a bunch of financials in the portfolio that seem a little bit cheaper than Citibank, but I think Citibank would work, will make money if interest rates will start to rise,” he said.
He added, “Another idea came in, I didn’t want to raise my exposure so I sold, and went to something else.”
Speculations over a Netflix takeover have been ongoing for a long time with heavyweights such as Apple and Walt Disney Co (NYSE:DIS) attached to a potential deal.
However, the billionaire investor noted that he does not think a takeover at a “nice premium” will be announced anytime soon. Cooperman revealed that he sold his $34.1 million stake in Netflix, which he bought sometime between April 1 and June 30 this year.
Cooperman’s flagship fund, the Omega Overseas, which averaged 14.6% returns since 1992 to mid-2014, has beaten the S&P 500. However, the fund has faltered in recent years. In fact, the fund lost 10.4% in 2015. He also waved a red flag over Apple Inc. (NASDAQ:AAPL), a company which he held on and off over the past several years.
Apple’s latest issues, including flagging sales of its main breadwinner, the iPhone, are making a lot of investors wary of the company’s future. When asked what would it take for Omega to take Apple back, Cooper said the Cupertino tech giant’s best days might be over.
Cooperman explained, “My concern is that Apple’s best days might be behind it because there’s nothing to replace the iPhone and so it’s a company that generates lots of cash but may be a smaller company in three of four years so we’ve put our money elsewhere say Google, or Facebook, which we think has more visible growth.”
Meanwhile, Apple is gearing up for the grand launching of the iPhone 7 this September 7. If rumors about the iPhone’s design are true, Apple’s newest flagship smartphone is likely to disappoint a lot of fans.
Wall Street analysts are generally bullish about the stock, especially with the iPhone’s redesign rumors for 2017. Virtually 85% of analysts covering the stock are giving it a buy rating.
Apple shares are up $0.25 to $106.35 in pre-market trading today.
On valuation-measures, the issue has a trailing-12 and forward P/E of 12.37 and 11.91, respectively. P/E to growth ratio is 1.64, while t-12 profit margin is 21.70%. EPS registers at 8.58. The company has a market cap of nearly $572 billion and a median Street price target of $120 with a high target of $185.
On trading-measure, Apple stock has a beta of 1.38 and a short float of 51.7 million. In the past 52 weeks, shares of the iPhone maker have traded between a low of $89.47 and a high of $123.82, with the 50-day moving average [MA] and 200-day MA located at $104.83 and $101.21 levels, respectively.
AAPL currently prints a one year loss of more than 6 percent, and a positive year-to-date return of around 1 percent.