TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

I have over 20 years’ experience investing in the TMT and Consumer sectors, almost entirely on the buyside. Started at Bernstein covering software in 2001, moved to the buyside at Government of Singapore Investment Corporation (GIC) in 2003, covering hardware, software, and media. 

After getting an MBA at NYU in 2008 and a CFA, I spent 8 years at Coburn Ventures (a market neutral TMT/Consumer hedge fund). In 2015, I joined Deimos Asset Management, a low net multi-strat, where I managed a  TMT/Consumer portfolio.

I've spent the past few years at Obex Capital Management providing independent investment research to TMT and Consumer investors.

TMT & Consumer Independent Equity Research Analyst

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TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

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<p><em><strong>Corrigenda: There is an error in this Insight. Please note the correction.</strong></em></p>
<p><em><strong>Correction: The first line under Results in the Detail section should read "Revenues of $6.64B (+22% YoY), a touch ahead of consensus $6.6B."</strong></em></p>
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<p>We have been longtime fans of Netflix the product and Netflix’s management team can rightfully be described as visionary. They had the vision to have the public markets fund an experiment in business models that appears now set to breakeven on FCF in 2021. We have said for the past two quarters that Netflix is a good relative short given Deceleration in Subscriber Growth, Rising Churn, and Rising FCF burn. The key blow to our thesis is that FCF was given the all clear by management last night, while the CFO said churn was a record low.</p>
<p>The key question going forward…if Netflix can now generate tangible FCF into the future and this model is sustainable, don’t we then have to value Netflix on FCF? You don’t short stocks over arguments about what multiple to put on terminal values, and we aren’t advocating outright shorting Netflix, which has proven to be the #2 alltime widowmaker of short sellers (after Tesla), but we think Netflix resumes its role as the favored funding short once the dust clears from this quarter’s FCF announcement and investors focus back on the decelerating sub growth.</p>
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<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
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Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The first line under Results in the Detail section should read "Revenues of $6.64B (+22% YoY), a touch ahead of consensus $6.6B."


We have been longtime fans of Netflix the product and Netflix’s management team can rightfully be described as visionary. They had the vision to have the public markets fund an experiment in business models that appears now set to breakeven on FCF in 2021. We have said for the past two quarters that Netflix is a good relative short given Deceleration in Subscriber Growth, Rising Churn, and Rising FCF burn. The key blow to our thesis is that FCF was given the all clear by management last night, while the CFO said churn was a record low.
The key question going forward…if Netflix can now generate tangible FCF into the future and this model is sustainable, don’t we then have to value Netflix on FCF? You don’t short stocks over arguments about what multiple to put on terminal values, and we aren’t advocating outright shorting Netflix, which has proven to be the #2 alltime widowmaker of short sellers (after Tesla), but we think Netflix resumes its role as the favored funding short once the dust clears from this quarter’s FCF announcement and investors focus back on the decelerating sub growth.

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.


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Netflix 4Q20: It’s a Free Cash Flow Machine!