Electronic Arts Inc. EA spiked 5 percent and peers more than 2 percent Friday after Melvin Capital Management increased its stake from 970,000 shares to 15.9 million.
The long-short equity fund boosted its ownership to 5 percent, according to a 13G filing, expanding a video game portfolio that includes GameStop Corp. GME and Take-Two Interactive Software Inc TTWO.
Why Do Traders Care?
Melvin Capital is largely admirable for its relative returns. In the first nine months of 2017, it increased assets under management from $1.9 billion to $3.5 billion and posted 32.1-percent post-fee gains, according to Business Insider. By contrast, the industry gained 4.8 percent.
The fund’s success is seen to be anchored in its founder, Gabe Plotkin, a former portfolio manager of Steve Cohen who oversaw $1.3 billion in consumer stocks at SAC Capital.
He carried his success and coverage base to Melvin Capital, which was said to have far outperformed Cohen’s Point72 in 2015, its first full year of operation.
What Else Is Plotkin Eyeing?
According to its latest 13F filing, Plotkin’s fund boasts positions in 69 diverse stocks, including SeaWorld Entertainment Inc SEAS and Six Flags Entertainment Corp SIX, CarMax, Inc KMX and Carvana Co CVNA, Kroger Co KR, Perrigo Company plc Ordinary Shares PRGO and Lowe’s Companies, Inc. LOW.
He’s got exposure to retail: J C Penney Company Inc JCP, Macy’s Inc M, L Brands Inc LB and Tanger Factory Outlet Centers Inc. SKT.
He’s got most of FAANG: Facebook Inc FB, Amazon.com, Inc. AMZN, Netflix, Inc. NFLX and Alphabet Inc GOOGL.
He’s got Visa Inc V, Mastercard Inc MA and Paypal Holdings Inc PYPL.
He’s got Wynn Resorts, Limited WYNN, Wyndham Worldwide Corporation WYN and Hilton Worldwide Holdings Inc HLT.
He’s got drink stocks and dine stocks: National Beverage Corp. FIZZ and Constellation Brands, Inc. STZ, Restaurant Brands International Inc QSR and Wendys Co WEN.
Considering the Street’s confidence in his EA play, changes to the aforementioned positions may be worth watching for.
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