According to the Entertainment Software Association, the U.S. gaming industry generated revenues of $23.5 billion in 2015, an increase of 5% over 2014. Much of the revenue growth was driven by the strong software channel, as software sales jumped 7% year-over-year to $16.5 billion. Meanwhile, market research firm Newzoo recently revealed that the global gaming market would be worth $99.6 billion in 2016, up 8.4% relative to the previous year. Newzoo analysts also anticipate the mobile gaming industry to overtake the once-dominant PC and console gaming market. Precisely, the mobile gaming market is anticipated to generate revenues of $36.9 billion in 2016, a massive increase of 21.3% over 2015. That said, the video gaming industry continues to grow and is anticipated to grow at a robust pace in the years ahead. For that reason, Insider Monkey compiled a list of five most favorite gaming stocks among the hedge funds tracked by our team.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
#5. Glu Mobile Inc. (NASDAQ:GLUU)
– Investors with long positions as of March 31: 12
– Aggregate value of investors’ holdings as of March 31: $36.80 Million
A total of 12 hedge funds tracked by Insider Monkey were invested in Glu Mobile Inc. (NASDAQ:GLUU) at the end of the March quarter, down from 13 recorded at the end of the prior quarter. The overall value of those hedge funds’ holdings in Glu Mobile dropped to $36.80 million from $50.57 million quarter-over-quarter. The 12 “smart money” players amassed nearly 10% of the company’s outstanding shares. The mobile gaming app publisher has seen its market value plummet by 62% in the past 12 months, as top-line figures have dropped year-on-year for three consecutive quarters. Glu Mobile, which focuses on the action, celebrity, sports, and simulation gaming genres, has been having a hard time maintaining retention rates of users of its popular existing titles such as “Kim Kardashian: Hollywood”, “Deer Hunter 2014” and “Contract Killer: Sniper”. Revenue for the first quarter of the year dropped 21.5% year-on-year to $54.5 million. Joseph A. Jolson’s Harvest Capital Strategies had 4.35 million shares of Glu Mobile Inc. (NASDAQ:GLUU) in its portfolio at the end of the March quarter.