Tilson's T2 Fund Spokesperson: Bought Into Netflix on Valuation, Not M&A Possibilities; Been Buying Since Original Position

T2 Partners' Whitney Tilson took a royal shellacking by being short Netflix

during its ridiculous run up within the last year. He was right in his thesis, wrong in his timing. He was eventually forced to cover the short position when the stock was trading at around $230. The stock eventually topped out above $300 in July and has since plummeted in spectacular fashion. At the time of posting on Monday, NFLX shares were trading over 7% higher at $76.15. Shares have been down over 75% since July. However earlier today, dealReporter released a note saying that Amazon

or Verizon

may be considering a buyout Netflix. Amazon as a potential acquirer is not new news, as rumors of a

has been around for quite some time. Although, the rumor that Verizon may be a potential buyer, is new. The cellular giant announced last week

service of its own. In a Reuters exclusive, it has been revealed that the new service could be introduced in the coming year. While this information has yet to be confirmed – Verizon has not made any official announcements – two of Reuters' sources claim the service could be limited in scope. Benzinga reached out to T2 Partners for their thought about these takeover rumors. "We did not buy into Netflix because of M&A possibilities, we bought into them because of valuation," Glenn Tongue, Managing Partner at T2 Partners, told us. "However, when news broke of Verizon to develop a streaming service, it made our position in Netflix intriguing." "At today's price, it would be much cheaper for either company to buy Netflix versus attempting to create it on their own," Tongue continued. "This makes for a potential positive catalyst for Netflix going forward, however, we do not believe Netflix will accept any offer around current valuation." When T2 Partners originally bought into Netflix, Tilson said that the current position is not a "mega position," and on any number of metrics, he believes Netflix is cheap. It went from a $16 billion market cap just a few months ago to about $4 billion it today. He believes it is a strong company, and that the selling is way over done here. Glenn Tongue continued on to say, "We have been incrementally adding to our original position, though not in large amounts." He went on to say, "The bears in Netflix do not understand the subscriptions-based model." Whatever the case may be, Netflix is trading at a 17x price-to-earnings ratio, which is very low for a company with the growth that Netflix has. Netflix hit 52-week lows of $62.37 last month.