“Netflix isn’t over, not by a country mile,” says Loftus Peak’s Alex Pollak, who also likes semiconductors – helping realise 25 per cent returns a year since inception.
“Facebook’s got an existential challenge. And it is real, right? Netflix doesn’t have an existential challenge; they’ve just got a surprise,” the fund manager says. “So Netflix isn’t over, not by a country mile.”Facebook is trying to reinvent itself as a leader in virtual reality and metaverse applications as its historically reliable advertising revenuefrom Apple’s privacy settings and regulators. Facebook itself estimated the changes within iOS come at a cost of $US10 billion in 2022 revenue.
“Roku is to ad-funded streaming what Netflix is to subscription-funded streaming,” the fund manager says. “We’ve got the best of both worlds,” says Pollak. “We viewed them as a mechanism to play disruption and growth at much lower cost with much more upside, and much less risk.” “It’s not because we don’t believe in the long-term future of lithium, obviously that’s huge,” Pollak says. “But there’s a lot of political concerns and a lot of quality concerns.” It’s difficult, he says, as an investor to buy lithium producers “safely”.
Before Loftus invests in a company, it will arrive at a fact-based valuation using discounted cashflows projected over the next 10 years.Pollak is not interested in earnings multiples . “If a company is trading at an EV to EBITDA multiple of 15 or 25 or 35, what does that tell you about what it will grow [to] in three years’ time?” Focusing on the cashflow is the better guide, he argues.
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