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Mattel, Inc. (MAT) Up Slightly Despite Q2 Loss, Waning Barbie Sales

Mattel, Inc. (NASDAQ:MAT)‘s shares, which initially slid to a low of $24.80 in after-market trading or down by 1.39% from their Thursday close are now up by 0.39% in pre-market trading. The toy maker reported its second quarter earnings after markets closed yesterday, reporting a loss of $11.4 million, or $0.03 per share for the quarter, down from a profit of $28.3 million, or $0.08 per share, in the same quarter a year ago. Revenue was down 7% year-over-year to $988.2 million. Wall Street was expecting a loss of $0.04 per share on revenues of $995.4 million, according to data from Thomson Reuters. On an adjusted basis, however, the firm reported earnings of $23 million or $0.01 per share.

This is the first full quarter for Mattel, Inc. (NASDAQ:MAT) under the guidance of new CEO Christopher Sinclair, who assumed his post in April and promised to change the firm’s culture. Last month, Sinclair led a management reshuffle to help the company cut expenses, take action more efficiently and strengthen its core brands. While Mattel, Inc. (NASDAQ:MAT)’s gross margin improved to 47.9% in the just-ended quarter, sales of Barbie fell by 11% on a constant currency basis to $130.3 million. This is the sixth-straight quarter Barbie sales have declined. Sales of Fisher-Price toys, however, increased by 9% adjusted for currency impact. Mattel also announced a third quarter cash dividend of $0.38 per share, the same as the prior-year quarter, payable on September 18 to stockholders of record on August 26.

Mattel Inc. (MAT), NASDAQ:MAT, Yahoo Finance,

While the second quarter was grim for the company, hedge funds are very bullish on Mattel, Inc. (NASDAQ:MAT). The total value of holdings in the stock among the funds we track increased by 204.33% quarter-over-quarter to $371.89 million by March 31, a sentiment further amplified by the fact that the stock fell by 26.16% in the second quarter. Despite the poor earnings report (which hasn’t adversely affected shares as of now), smart money was vindicated in the second quarter that followed as the stock jumped by 12.43%. Meanwhile, heading into the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish in this stock, up by four from one quarter earlier.

Professional investors spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, while their returns have been strong the past two years, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012. A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 139% and beaten the market by more than 80 percentage points since then (see the details).

Another area Insider Monkey follows is insider trades. These transactions can tell people whether certain key insiders of companies are betting on the shares of their companies. For Mattel, Inc. (NASDAQ:MAT), Director Dean Scarborough bought 18,400 shares of the firm on May 20. Corporate Treasurer Mandana Sadigh, meanwhile, sold 14,822 shares of the firm on April 27. As insider purchases are a much stronger indicator than insider sales, we can consider this as bullish behavior.

With all of this in mind, let’s check out the fresh hedge fund activity regarding Mattel, Inc.

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