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What do the world's largest money managers like among companies in the toys & games group? Through research of the latest available institutional 13-F filings, we identify the toys & games stocks, including those of companies operating in the online games group, that are being accumulated and those being distributed by the world's largest fund managers, managing between $50 billion and over $700 billion in 13-F assets. Taken together these mega fund managers control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Also, taken together, they are bullish on the toys & games group, cumulatively adding $247 million in Q4 to their $14.18 billion prior quarter position (for more general information on these mega funds, please look at the end of the article).

The following are the toys & games company stocks that these mega fund managers are most bullish about, that are undervalued compared to the peers in their group, and also have a high dividend yield (see Table):

Hasbro Inc. (NASDAQ:HAS): HAS is a leader in the design, manufacture, and marketing of games and toys, and other entertainment offerings worldwide. Mega funds together added a net $109 million in Q4 to their $1.97 billion prior quarter position in the company, and taken together mega funds hold 43.6% of the outstanding shares. The top buyer was Wellington Management, with $254 billion in 13-F assets ($71 million), and the top holders were mutual fund powerhouse Fidelity Investments, with $492 billion in 13-F assets ($440 million), and Boston-based MFS Investment Management, with over $265 billion in assets under management ($430 million).

HAS reported its Q1 (March) quarter last Monday, missing on both analyst revenues and earnings (4c v/s 12c), with the company stating that the second half would be stronger on account of several new initiatives in the fall season. Its shares initially took a dip after the report and are back up slightly above the close prior to the report, currently trading at 11-12 forward P/E and 3.4 P/B compared to averages of 15.0 and 2.6 for its peers in the toys & games group, and it also has a dividend yield of 3.9% compared to the 0.8% average for the group.

Mattel Inc. (NASDAQ:MAT): MAT is a designer, manufacturer and marketer of toy products sold worldwide under the Mattel, Fisher-Price and American Girl brands. Mega funds together added a net $40 million in Q4 to their $5.54 billion prior quarter position in the company, and taken together mega funds hold 48.5% of the outstanding shares. The top buyer was Credit Suisse ($74 million), and the top holders were Wellington Management ($788 million), T Rowe Price Associates, with $288 billion in 13-F assets ($636 million), and Vanguard Group, with $1.6 trillion in assets under management ($594 million).

MAT has been a relative outperformer in the group, up about 20% YTD. In its most recent Q1 (March) quarter reported two weeks ago, the company missed on both analyst revenue and earnings (6c v/s 7c) estimates. The stock initially took a huge dip of over 10%, but has since recovered and currently trades at levels slightly below where it traded prior to the report. Its shares currently trade at 12-13 forward P/E and 4.3 P/B compared to averages of 15.0 and 2.6 for its peers in the toys & games group, and it also has a high dividend yield of 3.7% compared to the 0.8% average for its peers in the group.

Giant Interactive Group (NYSE:GA): GA is a Chinese developer and operator of online games, focusing on massively multi-player online role-playing games. Mega funds together added a net $19 million in Q4 to their $23 million prior quarter position in the company, and taken together mega funds hold 3.4% of the outstanding shares. The top buyer was Wellington Management ($15 million), also the top holder at $15 million. GA shares trade at a current 7.5 P/E on a TTM (trailing-twelve-month) basis and 3.3 P/B compared to averages of 24.1 and 2.0 for its peers in the Internet Content group, and it has a dividend yield of 5.3% compared to the average of 0% for its peers in the group.

The following are some additional stocks of companies in the toys & games group that mega funds accumulated in Q4 (see Table):

  • Activision Blizzard Inc. (NASDAQ:ATVI), that publishes interactive entertainment software and peripheral products for consoles, hand-held devices and PC, in which mega funds together added a net $313 million in Q4 to their $1.53 billion prior quarter position in the company;
  • Electronic Arts Inc. (NASDAQ:EA), that is a developer of video game software and content for play on video game consoles, PCs, handheld platforms, mobile phones and the Internet, in which mega funds together added a net $13 million in Q4 to their $2.30 billion prior quarter position in the company; and
  • Zynga Inc (NASDAQ:ZNGA), that develops, markets and operates online social games such as CityVille, FarmVille, FrontierVille and others, making them available worldwide on various platforms, including Facebook, MySpace and Yahoo, as well as the iPad, iPhone and Android devices, in which mega funds together added a new $7 million position in Q4.

Besides these, mega funds based on their Q4 trading activity indicated that they are bearish on the following stocks of companies in the toys & games group (see Table):

  • Netease Inc. (NASDAQ:NTES), that is a Chinese provider of an interactive online gaming community, internet portal and wireless value-added services, in which mega funds together cut a net $78 million in Q4 from their $1.11 billion prior quarter position in the company;
  • Chanyou.com Ltd. (NASDAQ:CYOU), that is a Chinese provider of free-to-play massively multi-player online role-playing games (MMORPGs), which are interactive online games that can be played simultaneously by various game players, in which mega funds together cut a net $19 million in Q4 from their $41 million prior quarter position in the company;
  • Perfect World (NASDAQ:PWRD), a Chinese developer of 3-D online games, in which mega funds together cut a net $3 million in Q4 from their $75 million prior quarter position in the company; and
  • Glu Mobile Inc. (NASDAQ:GLUU), that designs original and third-party licensed mobile games for wireless handsets and social networking websites, in which mega funds together cut a net $1 million in Q4 from their $20 million prior quarter position in the company.

Table


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Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: Top Undervalued High Dividend Toys And Games Stocks Being Accumulated By Mega Funds