September 26, 2011 1 Comment
For those of you who acted on my original June 2011 theses to go ‘long’ Apple shares and ‘short’ Netflix (view original article & trade alert published here), anticipating the relative value (fundamental) arbitrage opportunity between these two companies, you will be pleased to note, the position has now been exited (live exit alert published via stocktwits and twitter), for a net gain in excess of 75%…
The trade lasted precisely 85 days, with Apple (our long position) appreciating 25.3% in this time period, while Netflix (our short position) declined 50.5%.
Net gains from this dollar-neutral trade (eg., long $50,000 AAPL/short $50,000 NFLX) was therefore 75.8% (the differential between the long/short position). On an annualized basis, this represents capital growth of 325% over a pro-rata 365 day period – by Shiraz Lakhi.