Hasbro, Inc. (HAS), Mattel, Inc. (MAT): How to Play the Toy Industry

At the end of 2012, there were a total of 22 hedge funds long the Mattel, Inc. (NASDAQ:MAT), compared to Hasbro, Inc. (NASDAQ:HAS)’s 15, but the increase was only 16% from the third quarter. Billionaire Ken Griffin’s Citadel Investment Group had the most valuable position in Mattel, Inc. (NASDAQ:MAT), worth close to $50.9 million, but making up a mere 0.1% of its total 13F portfolio.

Meanwhile, it does operate in the toy industry via its consumer products segment, which engages manufacturers and retailers to design, develop and sell a wide variety of products based on existing and new The Walt Disney Company (NYSE:DIS) characters and other intellectual property. One positive was that consumer products revenues increased 7% last quarter year over year, while segment operating income rose 11%. However, this segment still only makes up 8% of revenues.

As a company, Disney has been increasing its spending in parks and resorts, which could put pressure on margins in the near term. The media company also has a heavy reliance on advertising revenues, which also happens to be heavily tied to the macro-economic environment. Disney, being a relatively diversified media company, has managed to attract serious hedge fund investors. Mason Hawkins’ Southeastern Asset Management is the top hedge fund owner by shares, with nearly 4% of their portfolio invested in the company as of the end of 2012.

By the numbers

Hasbro, Inc. (NASDAQ:HAS) has the most impressive dividend, while also managing to grow its dividend payment the most:

Meanwhile Hasbro is also the cheapest:

Don’t be fooled

The tailwinds for the industry include the fact that consumer spending should increase on the back of a rebounding economy. However, it appears that Hasbro might be able to outperform the competition with its leading dividend yield and cheap valuation.

The article How to Play the Toy Industry originally appeared on Fool.com is written by Marshall Hargrave.

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