Josh Brown said he trimmed his Netflix position by 85 percent after the company announced a $72 billion agreement to buy parts of Warner Bros. Discovery, and netflix stock was trading about 4 percent lower as reported. Netflix will acquire Warner Bros.' film studio and streaming service at $27.75 per WBD share, a deal Brown called compelling for the company even as he reduced exposure. Brown, who is the CEO of Ritholtz Wealth Management, told CNBC's Halftime Report that he kept a very small stake but cut most of his position as a portfolio management move.
Brown said he still views the acquisition as valuable for Netflix and for the broader streaming landscape, and he praised Netflix for keeping the assets out of other hands. He told CNBC that he liked the deal and believed Netflix represented "a tremendous value," but he also said the transaction created near-term constraints on the company's capital and growth options. Warner Bros. Discovery shares rose almost 5 percent as reported.
Regulatory Scrutiny Opportunity Cost And Near Term Watch
Brown cited regulatory and antitrust scrutiny as a primary reason for his reduction, saying he could not "sit for a year and watch this become a political football and tie up capital," as reported on CNBC. He said the size of the transaction makes it likely to draw intense review and described heightened oversight with a colorful reference to the "Eye of Sauron," suggesting regulators will pay close attention. Brown labeled his move a portfolio decision rather than a comment on the deal's merit.
He added that the deal could tie up Netflix's capital and slow near term growth or spending, and he plans to watch the stock closely for the next 12 to 18 months before taking further action. Brown said he expected other investment opportunities with nearer term upside while the acquisition works through scrutiny, and he kept a small position to monitor developments.
