Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Activision Blizzard, Inc. (ATVI), Electronic Arts Inc. (EA) & More: The Hottest Video Game Stocks Among Hedge Funds

Despite the plethora of video game developers out there both big and small, few video game companies end up going public. In an effort to maintain control over their creative process, and with the rise of crowdfunding platforms like Kickstarter, which has been especially beneficial for smaller game developers to fund their projects, there is little incentive for them to go public.

However, a few of the largest video game developers and publishers in the world including Activision Blizzard, Inc. (NASDAQ:ATVI), Electronic Arts Inc. (NASDAQ:EA), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO) are public companies, and we can turn to hedge funds to gain insight on their mood concerning the overall industry as video gaming enters perhaps its last console cycle (although we’ve heard that before).

Electronic Arts Inc. (NASDAQ:EA)

Why hedge funds you ask? Well with their immense analytical departments and ability to predict broad industry trends, they are the perfect investors to emulate. We say emulate rather than invest with, as the fees they charge simply destroy the otherwise positive returns they generate through their top picks.

Note that the following list does not include Microsoft Corporation (NASDAQ:MSFT) or Sony Corp (ADR) (NYSE:SNE). While being of course two of the largest players in gaming, including having their own in-house development teams, the two companies’ gaming operations only account for a portion of their overall business, making them less ideal as case studies for the gaming industry.

Now then, let’s see what hedge funds think about some of the most prominent names in gaming, beginning with their top pick heading into 2015, Electronic Arts Inc. (NASDAQ:EA), which overtook Activision Blizzard, Inc. (NASDAQ:ATVI) during the fourth quarter to become the most popular gaming stock among the hedge funds we track. A total of 40 hedge funds had $1.01 billion invested in EA, up from 38 funds and just $732 million at the end of the third quarter. The large increase in invested capital was partly due to Electronic Arts Inc. (NASDAQ:EA)’s strong fourth quarter, as its shares rose by 31.62%. The stock also had a solid growth since the beginning of the year and is up by 56.18% over the past six months.

While being most well-known for its EA Sports titles, which include the popular Madden, FIFA, and NHL series of games, Electronic Arts Inc. (NASDAQ:EA) has also become a major player in other genres like RPG’s (primarily through the purchase of Canada’s BioWare in 2008) and more recently, in mobile games (where much of its future growth is expected to come from). Philippe Laffont’s Coatue Management was the largest shareholder of Electronic Arts Inc. (NASDAQ:EA) at the end of 2014 among funds that we track, after opening a new 3.71 million share position during the fourth quarter.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.