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Stock Showdown – Take-Two (TTWO) vs Electronic Arts (EA): Jefferies Likes Both, But Which Is Best?

Electronic Arts announced the launch of a number of new games at the recent Electronic Entertainment Expo (E3) event in Los Angeles, gaining the confidence of investors with its strong lineup. Among those were Star Wars BattlefrontStar Wars: The Old RepublicPlants Vs Zombies, Mirror’s Edge Catalyst, Need for Speed, and a number of new games in its various sports franchises, including NFL 16. Given the strong market position for those games, analysts are expecting Electronic Arts to continue its positive development on the NASDAQ and hence rank the share as a “Strong Buy” on average. For Take-Two Interactive, the market is expecting it to release DLCs (Downloadable Content) for Independence Day 2.0 and III-Gotten Gains, and possibly some online updates to GTA 5. The DLCs are expected to be released in July and August/September, since it is not possible due to practical reasons to launch the two during the same months. Gamers however seem to prefer the DLC for III-Gotten Gains and the market anticipates that the launch will be on or around July 4.

So, what top hedge funds showed interest in these gaming stocks? Philippe Laffont, representing Coatue Management, increased his stake in Electronic Arts Inc. during the first quarter by 77% to 6.55 million shares but had no holdings in Take-Two Interactive. In Take-Two Interactive however, David Einhorn and his fund Greenlight Capital had a great stake of 4.70 million shares, which he left untouched during the quarter. Einhorn did not have any holdings in Electronic Arts Inc. The interest for Take-Two Interactive is solid, with 34 of 730 hedge funds in our database having stakes in the company as of March 31, the same as three months prior. Regarding Electronic Arts, 41 funds had positions on March 31, up from 40 at the end of 2014,  indicate a slight increase in optimism heading into this quarter.

Although Electronic Arts has been having a strong last year, it seems like it is still the preferred pick of the smart money, and has a lot going for it. While it has become increasingly maligned among gamers for its love of DLC and DRM, it remains one of the best gaming companies in the world with a huge stable of hit series, and the top gaming stock in the world.

Winner: Electronic Arts (EA)

Disclosure: None

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