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.
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.
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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.
Hedge fund activity in Mattel, Inc. (NASDAQ:MAT)
Of the funds tracked by Insider Monkey, Israel Englander‘s Millennium Management had the largest position in Mattel, Inc. (NASDAQ:MAT), owning 2.97 million shares worth close to $68 million, amounting to 0.1% of its total 13F portfolio. The second-most bullish hedge fund manager was Jim Simons of Renaissance Technologies, with 2.69 million shares, a $61.5 million position; the fund manager had 0.1% of his fund’s 13F portfolio invested in the stock. Other hedgies that hold long positions include Glenn Russell Dubin’s Highbridge Capital Management, Joel Greenblatt’s Gotham Asset Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
As industrywide interest jumped, key hedge funds have been driving this bullishness. It should be noted that the previously mentioned Renaissance Technologies, managed by Jim Simons, established its substantial Mattel, Inc. (NASDAQ:MAT) holding entirely in the first quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $17.1 million investment in the stock during the quarter, opening a position of call options underlying 750,000 shares. Furthermore, Magnetar also bought a long position of 300,000 shares worth about $6.86 million. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, and Guy Shahar’s DSAM Partners.
As hedge funds are very confident in Mattel, Inc. (NASDAQ:MAT) and at least one insider has also bought shares recently, we are inclined to recommend a long position on the company’s shares, regardless of Barbie’s continuing decline.
Disclosure: None
