Blue Hawk Investment Group recently released its Q2 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 14.06% for the quarter (net), underperforming its benchmark, the S&P 500 Index which returned 19.95% in the same quarter. You should check out Blue Hawk Investment Group’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.
In the said letter, Blue Hawk highlighted a few stocks and Electronic Arts Inc. (NASDAQ:EA) is one of them. Electronic Arts Inc. (NASDAQ:EA) is a video game company based in California. Year-to-date, Electronic Arts Inc. (NASDAQ:EA) stock gained 30.0% and on August 7th it had a closing price of $143.99. Here is what Blue Hawk said:
“Electronic Arts (EA) – We’ve been familiar with the EA story for almost a decade now, as it was the first stock our PM Jake DuBois covered during his days at T. Rowe Price (and informally the first stock bought on his recommendation). The stock has been on a wild journey since then, from severely out of favor at that time in 2013, to eventually a Wall Street darling, and back to being largely out of favor the last year or two. The thesis has not changed – EA has an annuity-type payment stream from their sports franchises (namely FIFA and Madden) with strong barriers to entry from licenses and improving unit economics, as well as an undemanding valuation. This was true in 2013 in the low $20s and continues to be true today.
Recently, we have found ourselves becoming very bullish on the stock and have been buying aggressively. Of note, we think the upcoming new console cycle is an underappreciated tailwind. Sony and Microsoft are targeting December 2020 launch for their next generation consoles. In the three years following new console launches (inclusive of year of launch), EA has averaged an annual return of 15.4% a year versus 7.0% for the S&P 500, dating back to 1993. Furthermore, in a world with aggressive valuations across the board and the S&P 500 trading at 25x EV/FCF Street estimates (CY’21), EA’s Street consensus 21x EV/FCF (CY’21) represents a very undemanding 15% discount to the index, and even cheaper on Blue Hawk estimates, and a rock-solid balance sheet with $6B of net cash to buy back stock or potentially acquire a competitor opportunistically. We believe the stock is poised for a strong run over the near, intermediate, and longer term.”
This isn’t the first time Blue Hawk talked about Electronic Arts Inc. (NASDAQ:EA) favorably either. The investment firm has been a long time Electronic Arts Inc. (NASDAQ:EA) bull. In 2018, we shared Blue Hawk’s bullish Electronic Arts Inc. (NASDAQ:EA) thesis in this article.
In Q1 2020, the number of bullish hedge fund positions on Electronic Arts Inc. (NASDAQ:EA) stock increased by about 7% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Electronic Arts’ growth potential. Our calculations showed that Electronic Arts Inc. (NASDAQ:EA) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.