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Glaxis Capital Betting Big On Video Games

Paul Holland and Matthew Miller founded Glaxis Capital Management in 2005. Glaxis is based in Sarasota, Florida and has $98.52 million in assets under management and $106.11 million in regulatory assets under management (which includes gross assets, capital commitments and certain proprietary accounts). The fund employs two strategies to manage its clients’ money: global macroeconomic and long-biased absolute return. Glaxis’ strategies use a macroeconomic top-down analysis and microeconomic bottom-up analysis to identify profitable investment opportunities.

In its latest 13F filing, Glaxis Capital disclosed an equity portfolio worth $65.65 million, held as of the end of September. During the third quarter, the fund added 15 new positions and closed its stakes in 13 companies. Its portfolio also showed that Glaxis Capital has a lot of exposure to technology stocks, which amass over 70% of its 13F portfolio’s value.

Glaxis’ tech investments seem to be paying off well. We estimate a fund’s returns by taking into account its long positions in companies worth over $1 billion as reported in 13F filings and calculate their weighted average returns. According to our calculations, Glaxis’ stock picks returned 5.7% during the second quarter and were 14.60% in the green in the first six months of 2017. In this way, Glaxis outperformed the S&P 500 by around 6.40 percentage points..

The fund’s latest 13F filing also showed that Glaxis’ raised its position in two video game companies: Electronic Arts Inc. (NASDAQ:EA) and Activision Blizzard, Inc. (NASDAQ:ATVI). Both companies have some very promising titles expected this year and the whole industry is growing at a fast pace. According to the Entertainment Software Association, 67% of households own a device that is used to play videogames and consumers spent $30.4 billion on games last year. The developments in the VR space will define the video game space in the next year, as VR headsets become better and more affordable. However, big video game companies aren’t interested in VR for now and expect to get in the space in a couple of years, once hardware manufacturers improve the technology and adoption of headset rises.

With this in mind, let’s take a closer look at five tech and video game stocks that Glaxis Capital Management is bullish on.

In Take Two Interactive Software Inc (NASDAQ:TTWO), Glaxis Capital cut its position by 16% during the third quarter, disclosing a $1.02 million holding that contains 10,000 shares. Take Two Interactive Software Inc (NASDAQ:TTWO)’s stock has surged by over 145% in the last year as it was helped by some successful releases, such as Grand Theft Auto V, which is one of the best-selling video games of all time.

Next year, Take Two Interactive Software Inc (NASDAQ:TTWO) is expected to release Red Dead Redemption 2, the sequel to the popular Western-based action game released in 2010. The game is highly hyped in the gaming community. Recently, the company also released NBA 2K18, which is expected to become a very popular e-sports title, given the popularity of the previous year’s version, 2K17, which is Take Two’s most popular e-sports game ever, with 8.5 million copies sold by August.

On the next page, we are going to take a closer look at four other tech stocks that Glaxis Capital is bullish on and in which it boosted its holdings during the third quarter.

In Electronic Arts Inc. (NASDAQ:EA), Glaxis raised its stake by 50% to 15,000 shares worth $1.77 million during the third quarter. Electronic Arts Inc. (NASDAQ:EA)’s stock has advanced by nearly 50% since the beginning of the year as the company delivered strong revenue growth and better-than-expected results for the past three quarters. The company recently released FIFA 18, which was well received. For example, in the UK, the game has been holding the number one spot for the last three consecutive weeks. Electronic Arts Inc. (NASDAQ:EA) is also expected to release Star Wars Battlefront II and Need For Speed: Payback next month.

Next in line is Activision Blizzard, Inc. (NASDAQ:ATVI), in which Glaxis boosted its holding by 763% over the quarter, having amassed 43,180 shares valued at $2.79 million at the end of September. Activision Blizzard, Inc. (NASDAQ:ATVI)’s stock has surged by 71% year-to-date, helped by a jump on February 9 on the back of the company reporting a record fourth-quarter, which included better-than-expected results and the announcement of a $1 billion share buyback program. Gamers are currently waiting for Call of Duty WWII, which is the most wanted game for Christmas, and which is expected to revitalize the cash cow that the Call of Duty franchise is for Activision Blizzard, Inc. (NASDAQ:ATVI). The company also released Destiny 2 in September, although analysts estimate that its sales are lower than that of the previous iteration, which was released in 2014.

During the third quarter, Glaxis Capital added chipmaker Applied Materials, Inc. (NASDAQ:AMAT) to its equity portfolio, as it initiated a stake containing 54,160 shares worth $2.82 million. Even though Applied Materials, Inc. (NASDAQ:AMAT)’s stock has almost doubled in value over the last 12 months, it’s still trading at a forward earnings multiple of just 15, which suggests that the stock is still a buy. Last month, Applied Materials, Inc. (NASDAQ:AMAT) provided its three-year guidance during its Analyst Day. The company expects non-GAAP adjusted EPS of $5.08 for fiscal 2020, which is almost double compared to the $2.81 EPS for the trailing twelve months.

Finally, Microsoft Corporation (NASDAQ:MSFT) represents Glaxis’ largest position in terms of value as of the end of September. The fund boosted its position in the company by nearly 200% to 151,590 shares valued at $11.29 million during the July-September period. Microsoft Corporation (NASDAQ:MSFT) is well positioned to enjoy growth from its main drivers like Office 365 and Azure PaaS. In addition, Microsoft also has the second-best selling gaming console, Xbox One, although it is behind Sony Corp (ADR) (NYSE:SNE)’s PS4 by a wide margin according to estimates. Microsoft Corporation (NASDAQ:MSFT) is also betting big on virtual and augmented reality. It recently showcased its Windows Mixed Reality headsets and is about to release its Halo: Recruit game made for Windows Mixed Reality.

Disclosure: None