Mario Gabelli’s 2022 Portfolio: 5 Tech Stock Picks

3. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

Number of Hedge Fund Holders: 58

Mario Gabelli’s Stake Value: $12,183,000

Percentage of Gabelli’s Portfolio: 0.11%

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is a New York-based video game creation and publishing company.

On June 9, David Karnovsky at JPMorgan reinstated coverage on Take-Two Interactive Software, Inc. (NASDAQ:TTWO) with an Overweight rating and a target price of $175. The upgrade follows the completion of the restricted period after the company’s $12.7 billion acquisition of Zynga in January 2022. The analyst highlighted that the acquisition had provided Take-Two Interactive Software, Inc. (NASDAQ:TTWO) access to developers and distributors of mobile games. This would help the company progress as a leading developer of original gaming content across various distribution mediums. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) already has a strong presence in the PC and gaming console segments.

In its Q4 2021 investor letter, Arch Capital Management discussed its stance on Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Here’s what the firm said:

“Take-Two Interactive is an American video game publisher of franchises like Grand Theft Auto (GTA), Red Dead Redemption (RDR), and NBA 2K. It is currently one of the larger positions in the fund at an 8.3% allocation.

We are bullish on Take-Two because we believe the company has competitive advantages that will keep its franchises relevant for many years. First, its games have distinct network effects that keep it insulated from competitors. Multiplayer online games are only fun if others are also playing them, creating a winner-take-all effect that has specifically benefited GTA and NBA 2K over the last decade.

On top of network effects, Take-Two has decades of developmental expertise and over 5,000 developers across its divisions, giving it semi-strong economies of scale that insulate it from most competitors. Yes, large competitors like Microsoft or any mega-cap company could invest the dollars to get to this developer count, but it is impossible for a smaller studio to make games as immersive and at as quick of a pace as Take-Two does for its customers. They just don’t have the scale…” (Click here to see the full text)

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) was held by 58 hedge funds as of Q1 2022.