By Jessica Yun
Source: Yahoo Finance
Facebook, Amazon, Apple, Netflix, and Google, better known as the ‘FAANG’ stocks when taken together, are some of the biggest household names in the world.
But not everyone thinks they all make good investments. One global investment management firm has dumped the FAANG stocks – all but one.
Netflix is the only remaining FAANG stock in WCM Investment Management’s portfolio, which made the cut due to its competitive advantage. The same thing – or lack thereof – caused them to drop Amazon.
“While it’s still a great business, we look for organisations whose competitive advantage is increasing, not weakening,” said WCM Investment Management co-CEO and portfolio manager Paul Black.
Netflix’s advantage over Amazon
“One reason is that in some countries in Eastern Europe, Latin America and Asia – markets where Amazon is trying to expand into – consumers can’t have parcels delivered securely to their door.
On the other hand, consumers in those markets will be able to stream Netflix easily, Black said.
“This means Netflix has a much greater opportunity in emerging markets and developing countries. This provides it with a growing competitive advantage and ultimately greater growth potential.”
For instance, when faced with the choice of paying $110 a month for a selection of cable programs or $10 a month for Netflix, it’s no wonder that Netflix has 110 million subscribers and unseated HBO and Showtime.
They’re showing no signs of slowing down. Netflix announced on Thursday that it would set up a new $100 million dollar production hub in New York City.
According to calculations by CNBC, if you invested $1,000 in Netflix 12 years ago, you’d have US $90,000 (AU $120,800) now.
But it’s not just about the figures – Netflix’ focus on corporate culture counts for a lot, too, Black pointed out.
“Corporate culture is as important to a company’s health and future as any financial indicator. In fact, I would argue that culture is the single best predictor of long-term performance and viability.
“Companies with a positive workplace culture consistently deliver superior investment returns. Engaged employees keep customers happy and deliver consistently on business objectives which translates to higher sales and lower financial volatility.”