What are the best video games and esports stocks to buy today? In this time of uncertainty characterized by volatile market movements, economic contraction, and spiraling unemployment, finding stocks to put your money into seems like an arduous task. Some investors might think that the stock market is acting irrationally and puzzled by the quick recovery of stock prices sin the end of March. The market’s movements isn’t far away from economic realities. Economic reality is that long-term real interest rates are negative, the Federal Reserve is flooding the market with cheap credit, and the current economic slowdown is temporary.
Investors might wonder how to profit from a business built on audiences watching others play video games. However, the sector has witnessed a big surge in patronage during the Covid-19 coronavirus pandemic as consumers stay at home. That has raised interest in video game stocks and esports companies because they make money through broadcast licensing deals, merchandise, live-event ticket sales, sponsorships, advertising, and other channels.
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In order to compile this list of best video games and esports stocks to buy we started with top 10 stocks in the Global X Video Games & Esports ETF (HERO). According to its website this ETF “seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality”.
Savvy investors have used hedge funds as a litmus test to gauge the profitability of stocks and to know the trajectory of market sentiment. Research carried out by Insider Monkey has shown that a select group of hedge fund holdings have consistently outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). As such, hedge fund sentiments are undoubtedly a useful indicator that experienced investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Using hedge fund sentiment data from 800+ hedge funds, we ranked the top 5 video gaming and esports stocks to buy. Here are the best video gaming and esports stocks to buy according to hedge funds:
5. Zynga Inc. (NASDAQ: ZNGA)
Zynga Inc (NASDAQ:ZNGA) develops, markets, and operates social games as live services in the United States and internationally. The company's games are played on mobile platforms, such as Apple iOS and Google's Android operating systems, as well as on social networking sites, such as Facebook (NASDAQ:FB) and Snapchat.
The company has a market capitalization of $10.424bn., while the company’s share price has increased by 57.8% this year. In Q1 2020, the number of bullish hedge fund positions on Zynga Inc (NASDAQ: ZNGA) was 59.
As Zynga Inc. (NASDAQ:ZNGA) approaches its next earnings release, on August 5, 2020, analysts are projecting reported earnings of $0.06 per share, which represents a year-over-year change of +250%. Revenues are also expected to be $503.07 million, up 33.7% from the year-ago quarter.
As at March 2020, Iridian Asset Management held the most valuable stake in Zynga Inc (NASDAQ: ZNGA), worth $160.2 million. This is followed by Renaissance Technologies which amassed $117.6 million worth of shares. Cadian Capital, Two Sigma Advisors, and Citadel Investment Group were also very bullish on the stock, becoming one of the largest hedge fund holders of the company. As regards portfolio weights assigned to each position Greenvale Capital allocated the largest weight to Zynga Inc (NASDAQ: ZNGA), which comprises 12.6% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, setting aside 6.69 percent of its 13F equity portfolio to the stock.
4. Take-Two Interactive Software, Inc. (NASDAQ: TTWO)
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) develops, publishes, and markets interactive entertainment solutions for consumers worldwide. According to Yahoo Finance, the New York based company offers its products under the Rockstar Games, Private Division, 2K labels and Social Point labels. The cloud company is credited with action/adventure products under the Grand Theft Auto, Max Payne, Midnight Club, and Red Dead Redemption names; and offers episodes, content, and virtual currency.
The company has a market capitalization of $18.351B, while the YTD performance of the stock stands at 30.7%. Take Two Interactive reported first-quarter fiscal 2020 results on Aug 3. For the quarter, the company generated GAAP net revenues of $831 million, and GAAP earnings of $0.77 per share.
A total of 66 hedge funds have Take Two Interactive (NASDAQ: TTWO) on their portfolio.
3. Electronic Arts Inc. (NASDAQ:EA)
Electronic Arts Inc. (NASDAQ:EA) develops, markets, publishes and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide.
The company has a market capitalization of $40B, while its share price has increased by 29.11% this year. Electronic Arts (NASDAQ:EA) reported first-quarter fiscal 2021 earnings of $1.25 per share, which declined 73.7% year over year. However, revenues rose by 20.7% (year over year) to $1.45 billion.
The company has a total of 73 hedge funds investors. AQR Capital Management was the largest shareholder of Electronic Arts Inc. (NASDAQ:EA), with a stake worth $301.1 million as at September last year. AQR Capital Management which amassed a stake valued at $204.1 million is the company's second largest hedge fund investor. Renaissance Technologies, SoMa Equity Partners, and SRS Investment Management also have susbstantial positions in the stock. In terms of the portfolio weights assigned to each position, SoMa Equity Partners leads in this category having assigned 9% of its 13F portfolio to Electronic Arts Inc. (NASDAQ:EA). KCL Capital is also relatively very bullish on the stock, allocating 4.96% of its 13F equity portfolio to stock.
2. NVIDIA Corporation (NASDAQ: NVDA)
NVDA is in the portfolios of 95 hedge funds. Citadel Investment Group held the largest options stake in NVIDIA Corporation (NASDAQ:NVDA), which was worth $1.1 billion. This was followed by GQG Partners which amassed $995 million worth of shares. D E Shaw, Fisher Asset Management, and Citadel Investment Group are also bullish on the stock, with substantial positions of their portfolios assigned to the stock. As regards portfolio weights, Albar Capital allocated the biggest weight so far to NVIDIA Corporation (NASDAQ:NVDA), assigning 12.79% of its 13F portfolio. AlphaOne Capital Partners is also very bullish on the stock, allocating 9.6% of its 13F equity portfolio to the stock.
1. Activision Blizzard, Inc. (NASDAQ:ATVI)
Activision Blizzard, Inc. (NASDAQ:ATVI) is the top video games stock in our list. The company was founded by underpaid employees of Atari back in 1979.
Today the company has a market capitalization of $66 billion and its share price has increased by 45% so far this year. Activision Blizzard (NASDAQ:ATVI) is set to report its 2020 Q2 results on Aug 4. the company expects non-GAAP revenues of $1.69 billion and earnings of 64 cents per share. The projected figure suggests a surge of 79% from the year-ago quarter’s reported figure.
The company has 101 hedge fund investors. Citadel Investment Group was the largest shareholder of Activision Blizzard, Inc. (NASDAQ:ATVI), with a stake worth $273.1 million. This was followed by Citadel Investment Group was Alkeon Capital Management, which controlled $224.1 million worth of the company's shares. Jericho Capital Asset Management, SoMa Equity Partners, and Suvretta Capital Management also assigned substantial parts of their portfolio to the stock, making them among the largest hedge fund holders of the company. In terms of the portfolio weights, Jericho Capital Asset Management leads in this category with an allocation of 13.82% of its 13F portfolio to Activision Blizzard, Inc. (NASDAQ:ATVI) . Discovery Capital Management comes second in this category after the comoany set aside 10.28% of its 13F equity portfolio to stock.
Disclosure: None. This article was originally published at Insider Monkey.