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Hedge Funds Are Crazy About Electronic Arts Inc. (EA)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Electronic Arts Inc. (NASDAQ:EA).

Is Electronic Arts Inc. (NASDAQ:EA) a healthy stock for your portfolio? Investors who are in the know are taking an optimistic view. The number of long hedge fund bets inched up by 4 recently. At the end of this article, we will also compare Electronic Arts Inc. (NASDAQ:EA) to other stocks, including Corning Incorporated (NYSE:GLW), Energy Transfer Partners LP (NYSE:ETP), and Nomura Holdings, Inc. (ADR) (NYSE:NMR) to get a better sense of its popularity.

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In the eyes of most investors, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, our experts hone in on the bigwigs of this club, about 700 funds. These money managers oversee bulk of the smart money’s total capital, and by tracking their matchless picks, Insider Monkey has identified a number of investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, let’s check out the latest action regarding Electronic Arts Inc. (NASDAQ:EA).

How have hedgies been trading Electronic Arts Inc. (NASDAQ:EA)?

At the end of the third quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 9% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Stephen Mandel’s Lone Pine Capital has the biggest position in Electronic Arts Inc. (NASDAQ:EA), worth close to $595 million, amounting to 2.4% of its total 13F portfolio. Coming in second is Coatue Management, managed by Philippe Laffont, which holds a $315.4 million position; 3.5% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Cliff Asness AQR Capital Management, D E Shaw, and Ken Griffin’s Citadel Investment Group.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Electronic Arts Inc. (NASDAQ:EA). Marshall Wace LLP had $43.2 million invested in the company at the end of the quarter. Wojciech Uzdelewicz’s Espalier Global Management also made a $5.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Sandler’s Sandler Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Van Schreiber’s Bennett Lawrence Management.

Let’s go over hedge fund activity in other stocks similar to Electronic Arts Inc. (NASDAQ:EA). These stocks are Corning Incorporated (NYSE:GLW), Energy Transfer Partners LP (NYSE:ETP), Nomura Holdings, Inc. (ADR) (NYSE:NMR), and Sherwin-Williams Company (NYSE:SHW). All of these stocks’ market caps resemble Electronic Arts Inc. (NASDAQ:EA)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLW 38 957931 -1
ETP 18 470439 0
NMR 8 9430 1
SHW 45 1610614 10

As you can see, these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $762 million. That figure was $2.38 billion in Electronic Arts Inc. (NASDAQ:EA)’s case. Sherwin-Williams Company (NYSE:SHW) is the most popular stock in this table. On the other hand, Nomura Holdings, Inc. (ADR) (NYSE:NMR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks, Electronic Arts Inc. (NASDAQ:EA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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