In terms of valuation, Mattel Inc (NASDAQ:MAT) and Hasbro Inc (NASDAQ:HAS) are trading with very similar P/E ratios: Mattel at 20.24, and Hasbro at 24.55. But don’t be fooled by that, and keep in mind that the earnings at the base of Mattel’s P/E ratio are currently at historic lows. If one believes in the soon-to-come recovery of margins, profitability, and earnings of Mattel, then this stock looks much cheaper and, hence, more attractive. As for P/S, Hasbro is traded at 2.3, which is 63% above its historical average, whereas Mattel allows its investors to pay fairly justified 1.5 times sales.
Insider activity has been generally weak for Mattel Inc (NASDAQ:MAT) over the last year, except for one burst during April, when Christopher Sinclair, the newly-appointed CEO, acquired some 2.34 million shares. He was supported by COO Richard Dickson, who added around 607,477 shares of Mattel to his private portfolio. Hasbro Inc (NASDAQ:HAS)’s top executives were more active with their shares over the last year. At the end of 2014, they sold around 800,000 shares, but by February of this year, a net of 260,186 shares of Hasbro were bought back by insiders.
Adding to buying and selling shares by insiders, the activity of hedge funds covered by our extensive database, indicates that at the end of the first quarter, 26 funds held shares of Mattel Inc (NASDAQ:MAT) valued at $371.89 million, or by 412% more than at the end of 2014. As for Hasbro Inc (NASDAQ:HAS), 19 funds owned this company after the first quarter, having invested $214.24 million, which means that 91.68% more shares were added to funds’ portfolios over the first three months of the year. Based on that, we conclude that overall funds’ sentiments are more bullish on Mattel, where investors see a good buying opportunity with the stock cheap. The list of Mattel’s largest shareholders is headed by Israel Englander’s Millennium Management. The fund held around 2.97 million shares valued at $67.96 million at the end of the first quarter. Renaissance Technologies, managed by Jim Simons, is the runner up, with a newly-initiated position of 2.69 million shares worth $61.50 million. Simons, by the way, also tops the ranking of the largest stakeholders in Hasbro in our database. After he added to the position 410% on the quarter-to-quarter basis, his Renaissance Technologies owned some 1.00 million shares at $63.35 million. This fund is followed by David Harding’s Winton Capital Management, which reported having 466,500 shares of Hasbro, valued at $29.50 million, after the first three months of the year. The final decision about what stock to choose, as always, depends on you and no one else. Both companies have proven to be very similar operationally over the past. Whenever one of them took the lead, the other always caught up.
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For now, Mattel looks cheaper and we have no reason to believe that it will not figure out something to get back on the track to high profitability. Adding to that, Mattel offers an attractive dividend yield of 5.69%, yet it is not that clear if the company will manage to maintain the same payouts in the near term. Despite that, hedge funds seem to like Mattel much more which further inclines us in its favor.
Winner: Mattel (MAT)
Disclosure: None
