DanielGMask Posted July 22, 2014 Share Posted July 22, 2014 I have not seen a recent post about this one. I've just initiated a small position and I'm planning to add if prices fall further. This is what I consider a great franchise with propietary brands and exclusive licenses like Barbie, Monster High, several Disney classics, Hot Wheels, CARS, Toy Story, WWE Wrestling, Batman, Fisher Price, Little People and many more. The Barbie brand is suffering since kids are changing what they like and how they play and this may be the primary reason why the stock is down. Well, that plus the fact that they missed earnings and the outlook is not what everybody wanted to be. The company pays a nice dividend which I think is sustainable, it has doubled the book value per share during the last 12 years, reduced the number of shares in circulation repurchasing almost 100M shares during this period (27% of shares outstanding) and earned 4.5B before taxes during the last 5 years. Actually, during those 12 years the company earned more than 9B before taxes and paid 3.2B in dividends (Current Market Cap 12B+). Goodwill (including intangibles not clearly itemized in the balance sheet) is a little over 1.7B but I think this should be way higher in order to clearly identify the moat of this company. Why? Because the company is earning a return of 50%+ on tangible assets (average net income -taxes are in the 18%-20% range and I've not adjusted the return to a higher tax rate- last 3 years), which is an amazing return and suggests a clear and present intangible moat. What do you think guys? Link to comment Share on other sites More sharing options...
DanielGMask Posted July 28, 2014 Author Share Posted July 28, 2014 I originally posted this a few days ago but I think that I didn't write the subject as I should have and that's the reason there weren't any opinions. My original message: I have not seen a recent post about this one. I've just initiated a small position and I'm planning to add if prices fall further. This is what I consider a great franchise with propietary brands and exclusive licenses like Barbie, Monster High, several Disney classics, Hot Wheels, CARS, Toy Story, WWE Wrestling, Batman, Fisher Price, Little People and many more. The Barbie brand is suffering since kids are changing what they like and how they play and this may be the primary reason why the stock is down. Well, that plus the fact that they missed earnings and the outlook is not what everybody wanted to be. The company pays a nice dividend which I think is sustainable, it has doubled the book value per share during the last 12 years, reduced the number of shares in circulation repurchasing almost 100M shares during this period (27% of shares outstanding) and earned 4.5B before taxes during the last 5 years. Actually, during those 12 years the company earned more than 9B before taxes and paid 3.2B in dividends (Current Market Cap 12B+). Goodwill (including intangibles not clearly itemized in the balance sheet) is a little over 1.7B but I think this should be way higher in order to clearly identify the moat of this company. Why? Because the company is earning a return of 50%+ on tangible assets (average net income -taxes are in the 18%-20% range and I've not adjusted the return to a higher tax rate- last 3 years), which is an amazing return and suggests a clear and present intangible moat. What do you think guys? Link to comment Share on other sites More sharing options...
thefatbaboon Posted July 28, 2014 Share Posted July 28, 2014 Thanks for the idea, I'm interested. Will have a look over the coming weeks. Link to comment Share on other sites More sharing options...
bsned2 Posted July 29, 2014 Share Posted July 29, 2014 I'm going to take a look. I'm a total newbie to Value Investing, but I was in the entertainment biz for 20 years so I think I can get a good feel for Mattel's business. Will check back in. (I'm new enough that researching a company can take me a long time!) Link to comment Share on other sites More sharing options...
valueyoda Posted July 29, 2014 Share Posted July 29, 2014 The toy industry is notoriously difficult to attain a consistent track record, since children's desires are constantly evolving. It is better to own characters of franchises and to license those to toy companies to build toys around than to be involved with the toy manufacturing and sales process. It makes sense for Mattel to increase its efforts to monetize its franchises outside the toy store, such as software or movies, like Lego has done in the last decade. Given Mattel's share price decline, downside has been largely baked in. However, the upside is not so obvious, unless there is a meaningful turnaround in its core franchises. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted September 2, 2014 Share Posted September 2, 2014 Anyone still following this? Bouncing around 52w low Link to comment Share on other sites More sharing options...
rkbabang Posted September 2, 2014 Share Posted September 2, 2014 Anyone still following this? Bouncing around 52w low I've owned this for years in my daughters UTMA. Originally purchased between $15-$20, just sitting there with dividends being re-invested. It is a great brand that will still be around in 50 years, pays a nice and consistent dividend, shrinking share count. I don't think you can go wrong buying it at today's price. Maybe Berkshire will buy it out one day. Link to comment Share on other sites More sharing options...
KCLarkin Posted September 2, 2014 Share Posted September 2, 2014 Decent article in recent Barron's (attached).Hasbro_Could_Return_20%_-_Barrons.pdf Link to comment Share on other sites More sharing options...
Phaceliacapital Posted September 3, 2014 Share Posted September 3, 2014 Thanks for that! Link to comment Share on other sites More sharing options...
Phaceliacapital Posted October 2, 2014 Share Posted October 2, 2014 Almost 5% yield, 13.5 P/E. Starting to look interesting Link to comment Share on other sites More sharing options...
DCG Posted October 2, 2014 Share Posted October 2, 2014 I've been looking at this as well. Link to comment Share on other sites More sharing options...
Guest 50centdollars Posted October 2, 2014 Share Posted October 2, 2014 What do you guys think about kids wanting to play with iphones and ipads these days and not traditional toys? I watch my little nephews and they are always playing with iphones and ipads and they play less with traditional toys. I do think that Mattel buying mega brands was a good acquisition because parents buy their kids building blocks as it expands there minds but what do you really learn with playing with a barbie? Link to comment Share on other sites More sharing options...
LowIQinvestor Posted October 2, 2014 Share Posted October 2, 2014 Among my friends who have toddlers they are actually trying to get their kids away from the "screens" and back into traditional toys. Like you pointed out, building blocks etc seem to be a more creative outlet and stimulating than watching cartoons on an iPad. I keep looking at MAT but want it in the mid 20s. I figure that is close to a 10 PE and enough of a margin of safety (given the challenges with Barbie). Link to comment Share on other sites More sharing options...
DanielGMask Posted October 2, 2014 Author Share Posted October 2, 2014 Kids played with toys molded to seem like humans hundreds of years ago and will keep playing with similar toys for a very long time, that's human nature and technology won't eliminate that. I certainly have no clue if the toys will be sold as they are now or if people will print their own toys at home with a 3-D printer or something I can't even imagine. I also don't know if dolls/toys will be more alive (technology enhanced), but I do know that brands create loyalty and need. Barbie is an amazing brand that is not going away anytime soon. I have a similar opinion for Monster High, Hot Wheels and Fisher-Price, which are owned by Mattel. Mattel also has several important licenses from other brands like Dreamworks and Disney; by the way, they just lost Disney's princess line to Hasbro, which is an important loss. But either way, I think this is an amazing company in a here-to-stay industry with several not-going-anywhere brands at an attractive price. I'm a stockholder and I will keep buying at current prices, more so at lower ones. ;-) Link to comment Share on other sites More sharing options...
LowIQinvestor Posted October 2, 2014 Share Posted October 2, 2014 I echo your sentiments...The fear of kids shunning traditional toys for tech is overblown. Look at the success of "American Girl" (MAT brand). With that said, I just want a lower price. (about 20% lower) Link to comment Share on other sites More sharing options...
tede02 Posted January 26, 2015 Share Posted January 26, 2015 http://money.cnn.com/2015/01/26/news/companies/mattel-ceo-barbie/index.html?source=yahoo_quote CEO is out. Price sure looks attractive. Somehow I could see the trends continuing to go digital for a while then people will get nostalgic and tangible toys get popular again, etc. My wife and I don't have any kids yet so I feel like I'm at a disadvantage thinking about this business. Link to comment Share on other sites More sharing options...
CorpRaider Posted January 26, 2015 Share Posted January 26, 2015 Waiting for it to come in. My view is pretty much fully on square with the post two above this one. Link to comment Share on other sites More sharing options...
DanielGMask Posted January 26, 2015 Author Share Posted January 26, 2015 I wasn't attentive enough for buying today below $25, but I'm certainly interested at those prices. I'm a stockholder and will keep buying at lower prices. Link to comment Share on other sites More sharing options...
ATLValue Posted January 27, 2015 Share Posted January 27, 2015 I also believe that the digital trend in toys is somewhat overblown, as well as Mattel's ability to compete if the trend is indeed secular. Toys are similar to fashion in the sense that it is important to be "on trend". Toys go through phases and currently Mattel is in one of those cyclical periods where their main brands are not resonating. Over the long term thought I feel that Mattel has a solid strategy of innovating around their existing brands and even creating new brands such as Monster High. I am extremely pleased to have purchased this business for ~10.0x earnings (assuming a recovery) and a 5.70% dividend yield. Link to comment Share on other sites More sharing options...
orthopa Posted January 27, 2015 Share Posted January 27, 2015 I like the company and have been purchasing. I like the div and was fortunate to pick some up yesterday. Best thing is there are new customers born everyday for that business. And their product is entirely new to those new customers. ie they can produce similar products over and over and keep the new customers happy. Link to comment Share on other sites More sharing options...
CorpRaider Posted January 27, 2015 Share Posted January 27, 2015 I find it interesting too, but I'm going to take my time. CEO search which take a while and then new guy will likely tank a quarter or two. Link to comment Share on other sites More sharing options...
DanielGMask Posted January 30, 2015 Author Share Posted January 30, 2015 I've just posted an article in Seekingalpha about why I like the company. http://seekingalpha.com/article/2868706-why-im-long-mattel Link to comment Share on other sites More sharing options...
Against the crowd Posted January 30, 2015 Share Posted January 30, 2015 What do you guys think about kids wanting to play with iphones and ipads these days and not traditional toys? I watch my little nephews and they are always playing with iphones and ipads and they play less with traditional toys. I do think that Mattel buying mega brands was a good acquisition because parents buy their kids building blocks as it expands there minds but what do you really learn with playing with a barbie? I had a discussion on the same topic with a friend who is part of global conglomerate involved in various types of certification business. As per him his business for certifying toys is down globally 15% y-o-y while the business segment certifying electronic gadgets is up approx 25% y-o-y. They are definitely seeing a trend where consumption of toys on an absolute business is slowing down while gadgets are picking up. Having said that ......there will certainly be toys around us for many more years...it is just that the manufacturers of toys will have to work really hard to get their share of attention with the kids. Link to comment Share on other sites More sharing options...
silverhawk Posted March 13, 2015 Share Posted March 13, 2015 Stock up 4% on news of Frozen 2. Doesn't make much sense considering that Mattel is losing their contract to Hasbro in 2016 which is likely when the sequel is released. Despite a 50% fall, still doesn't seem like good value given terrible trends in key brands and disney contract loss reducing revenue and profitability. Majority of cash generation is going to the dividend which looks great at 6% but would be much better if they were buying back stock. http://variety.com/2015/film/news/disney-announces-frozen-2-1201451480/ Link to comment Share on other sites More sharing options...
mcmaaaaath Posted March 16, 2015 Share Posted March 16, 2015 Do any of the longs think Mattel needs an activist to come in and shake things up? Apparently Dan Loeb's great-Aunt co-founded Mattel. How can he resist taking back control of it? He has even said that as a kid he "associated success in business with Hot Wheels and Barbie dolls." http://www.businessinsider.com.au/who-is-dan-loeb-2013-1#speaking-of-his-family-loebs-great-aunt-is-the-creator-of-the-barbie-doll-5 Even if he bought 10% of the company it would be only his 4th largest position. Link to comment Share on other sites More sharing options...
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