NFLX - Bill Nygren Market Commentary - Q3 2021

• I want to follow up on last quarter’s commentary about governance with a related topic that we get asked about: shareholders vs. stakeholders. Is it really one against the other?
• Today, some CEOs are again following this playbook. Slicing R&D expenditures at drug companies or drastically cutting ad spending at consumer companies, for example, produce a quick pop in earnings—and often the stock price.
• At Oakmark, we believe that if stakeholders are mistreated, neither profits nor value can be maximized. CEOs can increase the next quarter’s or the next year’s profits by taking advantage of stakeholders—their employees, customers, suppliers and communities.
• Sustainable profitability can only be achieved by treating stakeholders fairly. That’s why Oakmark’s research process includes examining customer satisfaction, employee turnover, supplier financial health and community relations. We have to consider these factors so that our estimate of business value is based on recurring earnings.

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