Investors ‘chill’ and buy Private Equity as Netflix falls

This week’s update is co-authored with our Hui Si Tan (Senior Data Analyst)

Since our last update, market correction has happened and equity buying continues at a small but steady rate.

Very interestingly (for the first time since October 2021), we saw some buying in Fixed Income (these are largely DM corporate bonds).

Technology stocks are out of the picture for now

For the first time in many months, we are not seeing any purchase of Technology stocks. Cyclical stocks are now not the favourite pick, instead, Investors are buying into defensive stocks such as Consumer Non-Durables in this bear market.

Netflix/Twitter Saga

As Netflix released their first quarter report, it mentioned that they had lost 200,000 subscriptions and estimates to lose up to 2 million in Q2. This had caused an uproar in their stock price and resulted in their stock to plunge. Billionaire investor, Ackman had reportedly made a realized loss of $400 million with his Netflix position.

In comparison, our data shows that investors are “chilling” and did not sell their shares of Netflix even with Netflix’s first quarter report announcement.

Elon Musk’s recent venture into Twitter had also caused a significant bull in Twitter’s share price. Yet, investors are taking a back seat in their Tesla cars while not purchasing any Twitter shares.

Investing trend in Alternative Assets

There is a very clear trend of investing in Alternatives. This is likely on the back of large new fund raises from Private Equity managers, who are now seeing good opportunities to invest as valuations have fallen. This is in line with their expectations of the current market climate.

tl;dr

- Fixed Income were purchased after months of selling

- Netflix and Twitter are not Investors’ concern yet

- Technology stocks have taken a back seat while investing in defensive asset classes