Should You Consider Selling Your Electronic Arts (EA) Position?

Wedgewood Partners, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. For calendar 2021, a portfolio net return of +32.1% was recorded by the fund, outperforming the S&P 500 Index that delivered a +28.7% return for the same period, and the +27.6% gain of the Russell 1000 Growth Index. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Wedgewood Partners, in its Q4 2021 investor letter, mentioned Electronic Arts Inc. (NASDAQ: EA) and discussed its stance on the firm. Electronic Arts Inc. is a Redwood City, California-based video game company with a $38.7 billion market capitalization. EA delivered a 3.80% return since the beginning of the year, while its 12-month returns are down by -5.97%. The stock closed at $136.91 per share on January 19, 2022.

Here is what Wedgewood Partners has to say about Electronic Arts Inc. in its Q4 2021 investor letter:

“Electronic Arts detracted from portfolio performance during the fourth quarter. We also sold out of our position in the stock and used the proceeds to add to existing holdings that are better positioned competitively. The Company’s core FIFA franchise continues to thrive; however, the risk to this franchise has begun to rise as licensors demand a larger share of EA’s economics. Further, the Company’s execution around another core franchise, “Battlefield,” disappointed us, despite several previous comments from management that promised better execution. Although the Company’s equity appears cheap compared to estimates for earnings over the next 12 months, the risk to its core franchises extends beyond that time frame and we decided to redeploy capital into companies with better competitive positioning.”

Copyright: radub85 / 123RF Stock Photo

Our calculations show that Electronic Arts Inc. (NASDAQ: EA) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. EA was in 53 hedge fund portfolios at the end of the third quarter of 2021, compared to 56 funds in the previous quarter. Electronic Arts Inc. (NASDAQ: EA) delivered a -1.65% return in the past 3 months.

In November 2021, we also shared another hedge fund’s views on EA in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.