3SOF

The toy sector has been positively surprising Wall Street, as you can see on the two industry giant charts, Hasbro and Mattel:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36251;image)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36252;image)

So I'm interested in JAKK, a smaller but fast growing player in the toy sector. Let me make the usual fundamental analysis.

1. Study for the dilution factor estimate

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36253;image)

The share count has been increasing at a 2.2% rate since 2004, but this quarter the company reduced the number of convertible debentures and warrants outstanding significantly, because the # of shares outstanding on a fully diluted basis diminished 14.2%:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36254;image)

The number on the left is Q1 2007 out yesterday and the number on the right is Q1 2006. The current market cap is $744 M.

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36255;image)

JAKK's balance sheet is healthy, with a 4.34 current ratio and cash and equivalents accounting for 52% of total current assets.

Given all this I'll assume a dilution rate of 1% a year, so the dilution factor in my valuation model will be 1.01.

2. Study for the revenue CAGR estimate

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36256;image)

Revenue has been growing at a 34.3% average annual pace since 2003, to $765 M in 2006. For 2007 the company's guidance is $800 M, but I believe they can beat their guidance, as they've been doing lately. For 2008 analysts are expecting just $790 M in revenues, which I believe is completely ridiculous, because JAKK never had a year on year revenue decline, why should it have one in 2008? I put $850 M on the chart but it can be a lot more.

So, we have 34% historical revenue growth and 0% expected from Wall Street analysts. I'll shoot in the middle of it and get a 17% revenue CAGR estimate.

Also note the difference between JAKK's price to sales ratio and its industry average. JAKK is trading at a deep discount given this fundamental analysis metric.

3. Study for the net profit margin estimate

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36257;image)

Over the past 10 years the net profit margin has been quite stable, with all profitable years. The average net profit margin was 9.84%, so that's going to be my estimate for the future.

Look how JAKK is trading at 11 times earnings and the Toys & Games (http://finance.yahoo.com/q/co?s=JAKK) industry average is 24.38, so JAKK seems to be 54% undervalued. It would need to rise 117% to be valued at the industry average, in terms of earnings multiple.

4. Study of the EPS multiple estimate

I don't see any reason why JAKK shouldn't be valued according to its industry peers, even more so since JAKK is growing a lot faster than the industry (34.3% growth for JAKK and just 5.3% for the industry). So, my EPS multiple estimate is 24.38 which is the industry average.

Considering all this, my valuation model looks like this:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36258;image)

I see a 56.5% share price CAGR and an estimated share price of $101.94 three years from now. I consider this very attractive.

Trading Plan:

Buy JAKK, 6.66% of capital as always.

Hmmmmm
I been in and out of JAKK for the past 7 years.
Its overvalued at $25 not much growth here.
Will go up some end of year Passssss

Quote from: yukiii on April 27, 2007, 02:00:49 PM
Hmmmmm
I been in and out of JAKK for the past 7 years.
Its overvalued at $25 not much growth here.
Will go up some end of year Passssss

There has been growth. But with a trailing P/E of 11 you don't need growth. Why do you say it is overvalued?

Thanks :)

Quote from: David Randolph on April 27, 2007, 03:50:48 PM

Quote from: yukiii on April 27, 2007, 02:00:49 PM
Hmmmmm
I been in and out of JAKK for the past 7 years.
Its overvalued at $25 not much growth here.
Will go up some end of year Passssss

There has been growth. But with a trailing P/E of 11 you don't need growth. Why do you say it is overvalued?

Thanks :)

It always trends down in May till October then its a buy, probably going to $22 then back up again to$27.

$2.30 last year $2.39 this year and that the whole story. Timing is wrong.........

Hey guys..

It seems in the last two weeks or so, when David picks a new stock, it just gets hammered the day of or a few days later.   
Almost like, short term traders are shorting David's picks.
I learned after the TZOO tankage, to wait a few days on David's picks.
I have been getting absolutely hammered the last two weeks.
The sad thing is...  the DOW is setting daily records.
It's like a shift from Small Cap Value into Big Cap Growth stocks.
Anyone contemplated this thought?

Wxmang

In this 10 year chart I don't see what you point out. Sometimes it's
exactly the opposite.
Although it shows we approached a historical high resistance area

QuoteIt always trends down in May till October then its a buy, probably going to $22 then back up again to $27.

Always? Well, fundamentals are stronger now, I expect the stock to breakout to a new all time high around $30 in 2-3 months time.

Quote
$2.30 last year $2.39 this year and that the whole story. Timing is wrong........

My take is the company will beat $2.39. It previously said Q1 2007 EPS would be $0.07-$0.10, it came in at $0.12 (this is the seasonally the weakest quarter). $2.30 2006 EPS means the earnings multiple is 10.85 now. Hard to find a cheaper stock than this one, especially if you consider the growth rate.

As for timing, yes, I bought the stock today and it went down 6%, but I don't consider +/- 5% or 10% a timing mistake. If I start being concerned and trying to predict 5% moves I'll miss the big picture and won't make money at all over the long term.

Thanks for your view yukiii, time will tell.

Quote from: wxmang on April 27, 2007, 04:43:05 PM
Hey guys..

It seems in the last two weeks or so, when David picks a new stock, it just gets hammered the day of or a few days later.   
Almost like, short term traders are shorting David's picks.
I learned after the TZOO tankage, to wait a few days on David's picks.
I have been getting absolutely hammered the last two weeks.
The sad thing is...  the DOW is setting daily records.
It's like a shift from Small Cap Value into Big Cap Growth stocks.
Anyone contemplated this thought?

Wxmang

Over the last couple of weeks the Main Portfolio had a perfectly normal 6% drawdown. But still, the portfolio is up 17.9% in 2007 and the S&P 500 is up just 5.3%. I believe we're on track for a 30 - 40% year. You just entered at a bad time, at least, that has been the history. Please wait a couple of months more before jumping into conclusions.

Thanks for your testimonial :)

Quote from: David Randolph on April 27, 2007, 04:47:01 PM

QuoteIt always trends down in May till October then its a buy, probably going to $22 then back up again to $27.

Always? Well, fundamentals are stronger now, I expect the stock to breakout to a new all time high around $30 in 2-3 months time.

Quote
$2.30 last year $2.39 this year and that the whole story. Timing is wrong........

My take is the company will beat $2.39. It previously said Q1 2007 EPS would be $0.07-$0.10, it came in at $0.12 (this is the seasonally the weakest quarter). $2.30 2006 EPS means the earnings multiple is 10.85 now. Hard to find a cheaper stock than this one, especially if you consider the growth rate.

Try WPCS much better growth and a steal at $13.00.

Quote from: wxmang on April 27, 2007, 04:43:05 PM
Hey guys..

The sad thing is...  the DOW is setting daily records.
It's like a shift from Small Cap Value into Big Cap Growth stocks.
Anyone contemplated this thought?

Wxmang

Yes, I commented on one of the other threads a few days ago about how the smaller caps have recently finally begun to underperform the large caps. If you look at the chart of the Russell 2000, it's really struggling to break into new highs from it's Feb high. Compare that with $INDU $SPX $NDX
I think it's definitely something to be aware of.

http://stockcharts.com/h-sc/ui?s=$RUT&p=D&b=5&g=0&id=p08468882119

Quote from: BigSully1 on April 27, 2007, 05:28:50 PM

Quote from: wxmang on April 27, 2007, 04:43:05 PM
Hey guys..

The sad thing is...  the DOW is setting daily records.
It's like a shift from Small Cap Value into Big Cap Growth stocks.
Anyone contemplated this thought?

Wxmang

Yes, I commented on one of the other threads a few days ago about how the smaller caps have recently finally begun to underperform the large caps. If you look at the chart of the Russell 2000, it's really struggling to break into new highs from it's Feb high. Compare that with $INDU $SPX $NDX
I think it's definitely something to be aware of.

http://stockcharts.com/h-sc/ui?s=$RUT&p=D&b=5&g=0&id=p08468882119

Yep you don't want to be in most small caps only large cap intl companies or value plays with high growth in this economy. I am mostly in oil, materials, europe, asia, south america and large global us companies like UTX JOYG . You know what they say about go away in may, this year it will apply to micro and small caps.

Quote from: yukiii on April 27, 2007, 05:35:40 PM

Quote from: BigSully1 on April 27, 2007, 05:28:50 PM

Quote from: wxmang on April 27, 2007, 04:43:05 PM
Hey guys..

The sad thing is...  the DOW is setting daily records.
It's like a shift from Small Cap Value into Big Cap Growth stocks.
Anyone contemplated this thought?

Wxmang

Yes, I commented on one of the other threads a few days ago about how the smaller caps have recently finally begun to underperform the large caps. If you look at the chart of the Russell 2000, it's really struggling to break into new highs from it's Feb high. Compare that with $INDU $SPX $NDX
I think it's definitely something to be aware of.

http://stockcharts.com/h-sc/ui?s=$RUT&p=D&b=5&g=0&id=p08468882119

Yep you don't want to be in most small caps only large cap intl companies or value plays with high growth in this economy. I am mostly in oil, materials, europe, asia, south america and large global us companies like UTX JOYG . You know what they say about go away in may, this year it will apply to micro and small caps.

I think maybe you're jumping the gun and misunderstanding what I'm trying to get across. I'm not at all saying that you don't want to be in small caps, just to be aware of the recent performance lag and use some caution. According to Prudential Equity Group, small caps tend to lag their big cap brethren in the first month after a spike in volatilty, but after 6 months, returns favor small caps. It makes sense, doesn't it?

In the current situation though, the small caps outperformed and showed what I thought to be incredible resiliency in the first month after Feb 26 and only lagging in just the last 3 or 4 weeks.

Richard Moroney, editor of "Dow Theory Forecasts" and UpsideStocks" newsletters, still argues a bullish case for small caps in his April 1 edition of "UpsideStocks." Unfortunately, I would have to get permission to reprint copyrighted material here though.

Seems that you're trying hard to convince others to sell the portfolio, but that's alright, I'm always intertested to hear the bearish case if backed up by good arguments, and  I really like to hear Davids responses...brilliant.

Will you be right? I don't know, but I'll wait until the market tells me that or when you can produce a much more compelling argument. Keep trying.

Dear All,
I don´t understand right your discuss in English, sorry...
IMO US economy is very weak now, USD is unsafe currency and it is not in relation with next and next peaks in U.S. stockmarket and with enthusiasm of new highs of indexes-that is unbelievable for me and I have fear of crash there in stockmarket.
It is because I´m not interested in big players. I would rather to know an opinion or some your estimation, what will small caps do in background of stockmarket collapse.
Probably no visionary is here, but you are profesionals what I´m not. I would like to ask you for some reflection about potential impact such situation into David´s 3-years analyses.
And - what to do to don´t have investments in USD currency? Is there possibility to buy these 3SOF picks on Deutsche Borse for example?
I hope my text is quite understandably, sorry for my English once more.
Nice weekend!
nexta

QuoteTry WPCS much better growth and a steal at $13.00.

Indeed, at first sight WPCS seems quite attractive, it's a pity volume is so low and the company diluted shareholder's value a lot in the past (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=wpcs&lstStatement=10YearSummary&stmtView=Ann). But thanks for the tip, I'll cover it ASAP :)

QuoteAccording to Prudential Equity Group, small caps tend to lag their big cap brethren in the first month after a spike in volatilty, but after 6 months, returns favor small caps. It makes sense, doesn't it?

Yes, it makes sense. I'm trying to select specific stories that will probably outperform, big or small cap, it doesn't matter (just that a small company probably has a better chance of growing faster than a $10 B - $200 B market cap company).

QuoteDear All,
I don´t understand right your discuss in English, sorry...

No problem nexta, I'm an European too (Portuguese), and my English could be better, but with some time and practice you'll see you understand and will be able to write anything you want. English is the easiest language in the world (but it could be even easier in my view).

QuoteIMO US economy is very weak now, USD is unsafe currency and it is not in relation with next and next peaks in U.S. stockmarket and with enthusiasm of new highs of indexes-that is unbelievable for me and I have fear of crash there in stockmarket.

This would lead to a very extensive discussion nexta. Just three points: 1) Cyclical slowdowns didn't spoil previous bull markets, like the 1990-91 economic recession in the US didn't damage the long term bull market that started in 1982 and lasted until 2000. 2) The US dollar decline helps US based global companies. Their sales and profits, which are reported in USD, rise when  the dollar declines. The USD won't decline forever, in fact, I'm starting to think it is undervalued at this point. 3) Crashes and bear markets usually start when the economy is pretty hot, not when it is cold. If you look at all previous crashes, they always happened when everybody was optimistic about the economy, like the 1929 crash, the 1987 crash or the 2000 bear market. You need to be a bit of a contrarian to predict bull and bear markets.

QuoteIt is because I´m not interested in big players. I would rather to know an opinion or some your estimation, what will small caps do in background of stockmarket collapse.
Probably no visionary is here, but you are profesionals what I´m not. I would like to ask you for some reflection about potential impact such situation into David´s 3-years analyses.

The only impact would be on the 4th variable of the valuation model, the EPS multiple would contract if there were a bear market or a stock market crash. But my individual picks would probably still be attractive in such an event.

QuoteAnd - what to do to don´t have investments in USD currency? Is there possibility to buy these 3SOF picks on Deutsche Borse for example?

It would be the same. If you buy the stock in euros it won't rise as much as it will do in USD, if the euro rises against the USD. Companies are worth the same, it doesn't matter if their stocks are in USD or euros, and the NYSE valuation usually leads all others.

You can hedge your exposure to the USD using the forex market, but I wouldn't do that if I were you. If you want to measure your returns in euros and you expect the USD to fall, say, 5% in 2007, you just take out 5% of the returns I expect for the Main Portfolio in USD terms and you get your expectation in euro terms.

QuoteI hope my text is quite understandably, sorry for my English once more.
Nice weekend!
nexta

Nice week nexta, don't worry about the quality of your English, from what I've been experiencing Americans are very tolerant in this aspect, or else I couldn't have this job ;D

As for JAKK, I know the stock went down 6.2% on Friday, but that is meaningless to me. The company made $2.3 EPS in 2006 and it is very conservative in its 2007 EPS estimate of $2.39. It's forward earnings multiple is just 10.4, so this is one of the cheapest companies outthere, and it has been growing nicely. The CEO had the following to say about 2007:

Quote"We are pleased with our first quarter performance and believe we are well positioned to achieve our record sales and earnings expectations for 2007," said Jack Friedman, Chairman and Chief Executive Officer, JAKKS Pacific.

I also enjoy some of the company's new products a lot, like the following:

«Stephen Berman, President and Chief Operating Officer, stated, "During the first quarter, we launched several new well-performing products and line extensions, including our TV Game product based on the hit NBC game show, Deal or No Deal(R) (http://www.jakkspacific.com/).»

I'll keep holding JAKK.

Stocks sometimes trade in such strange ways over the short term. Here lyes a fast growing US based company (but selling throughout the world) with a trailing EPS multiple of 10.4, which is extremely attractive in my view.

I'm not going to read anything from the last two trading days and will classify them as "short term noise". I'll maintain my long term projections (http://www.3stocksonfire.org/fundamental.model.php?ticker=JAKK&portfolio=main) and will keep holding JAKK.

Quote from: David Randolph on May 01, 2007, 05:44:14 AM
Stocks sometimes trade in such strange ways over the short term. Here lyes a fast growing US based company (but selling throughout the world) with a trailing EPS multiple of 10.4, which is extremely attractive in my view.

Fast Growing? very very slow

QuoteFast Growing? very very slow

The historical revenue chart below answers for me. Thanks for your comment.

Yukiii, are you trying to show off at David's expense??

I believe you have enogh knowledge & experience to substantiate your views
with facts and TA. Please back up your opinions enabling all of us to make
better decisions.

I'm not going to smite you but would certainly like to read more frequently
your other interesting observations. Cut off the dark side 

Sorry for the intrusion
GLTA

Quote from: jorgegr on May 01, 2007, 02:40:45 PM
Yukiii, are you trying to show off at David's expense??

I believe you have enogh knowledge & experience to substantiate your views
with facts and TA. Please back up your opinions enabling all of us to make
better decisions.

I'm not going to smite you but would certainly like to read more frequently
your other interesting observations. Cut off the dark side 

Sorry for the intrusion
GLTA

Earnings estimates were upgraded $2.30A 2006   $2.40E 2007   $2.58E  2008
given a pe of 11 with a growth going forward of 7% will give you $27 which JAKK will attain  later in the year Christmas time, always goes down in the summer.  $24 is support, if market goes down Then $22. Risk reward is not great here. 10% down 10% up. Buy in October

Quote from: yukiii on May 01, 2007, 03:23:17 PM

Quote from: jorgegr on May 01, 2007, 02:40:45 PM
Yukiii, are you trying to show off at David's expense??

I believe you have enogh knowledge & experience to substantiate your views
with facts and TA. Please back up your opinions enabling all of us to make
better decisions.

I'm not going to smite you but would certainly like to read more frequently
your other interesting observations. Cut off the dark side 

Sorry for the intrusion
GLTA

Earnings estimates were upgraded $2.30A 2006   $2.40E 2007   $2.58E  2008
given a pe of 11 with a growth going forward of 7% will give you $27 which JAKK will attain  later in the year Christmas time, always goes down in the summer.  $24 is support, if market goes down Then $22. Risk reward is not great here. 10% down 10% up. Buy in October

Looks like you got a few smites Yukii, but I am applauding you for sharing here regardless of how it may be perceived.  Granted I sometimes also wish you gave a little more detail, but I didnt realize how much experience you have until recently and thus you bring a valuable perspective.  Please keep posting despite the smites, cheers to you.  :)

I agree with tokopuya. Applaud yukii  ;)

Its good having a different point of view on everything. I always enjoy seeing the bull and bear views because it allows us to see the stock from both perspectives. I hope yukii continues to post and contribute, just because he clashes sometimes with David doesnt mean that his views should be disregarded or viewed as starting a rift. Im sure david enjoys being kept on his toes with counter views that are very logical.

Quote from: nullzero on May 01, 2007, 10:02:47 PM
Its good having a different point of view on everything. I always enjoy seeing the bull and bear views because it allows us to see the stock from both perspectives. I hope yukii continues to post and contribute, just because he clashes sometimes with David doesnt mean that his views should be disregarded or viewed as starting a rift. Im sure david enjoys being kept on his toes with counter views that are very logical.

Yes, I have no problem with people that disagree with me, they give me material I need for the daily updates and make me think.

JAKK reacted positively to the 50 days SMA support. My take is you give the stock 6 months and you'll see it breaking out to new all time highs above $29.33. Time will tell. I'll keep holding JAKK, one of the safest investments of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php) in my view, because it has been so stable and consistent over the years.

And - what to do to don´t have investments in USD currency? Is there possibility to buy these 3SOF picks on Deutsche Borse for example?

It would be the same. If you buy the stock in euros it won't rise as much as it will do in USD, if the euro rises against the USD. Companies are worth the same, it doesn't matter if their stocks are in USD or euros, and the NYSE valuation usually leads all others.


Hi David,
thank you very much for your answers and opinions.
With one of them I don´t agree - I don´t believe,USD is undervalued now. And I have already lost  some money with USD slowdown. It is not in gains or losses of shares, but about investments to the USD. If I hade transfered CZK 22,50/1 USD a year ago, and now I can get back cca 20CZK/1 USD only, its  loss for me. I am thinking about to use credit for currency, to get back CZK in the same exchange rate in the future. But it is for about 5% p.a. interest,I think expensive. And it is because I was thinking about investments in another currency. IMO EUR is a bit safer. I might be really silly - by me, USD need not to be the world currency forever :-)) in common life I am very optimistic and keep smiling still.
On other side - I love US stockmarket for many many possibilities, free hands, great range of stocks and so on...You don´t find the same anywhere else on the world.
Have a nice day!
nexta

QuoteWith one of them I don´t agree - I don´t believe,USD is undervalued now. And I have already lost  some money with USD slowdown. It is not in gains or losses of shares, but about investments to the USD. If I had transfered CZK 22,50/1 USD a year ago, and now I can get back cca 20CZK/1 USD only, its  loss for me. I am thinking about to use credit for currency, to get back CZK in the same exchange rate in the future. But it is for about 5% p.a. interest,I think expensive. And it is because I was thinking about investments in another currency. IMO EUR is a bit safer. I might be really silly - by me, USD need not to be the world currency forever :-)) in common life I am very optimistic and keep smiling still.

Yes, the USD has been trending down. I was very bearish on the USD when it was trading at 0.85 per euro, but now at 1.36 USD/Euro ... I'm not bearish anymore. But I respect your views on currency exchange rates, I'm not an expert in the field.

As for JAKK, it is just unfairly cheap when compared to its competitors:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=36465;image)

There are two tests I want to make over the two following updates: 1) Listen to the latest conference call; 2) Read the latest 10-Q form filed with the SEC.

It's just that the discount JAKK is trading is incomprehensible to me, is there something under the carpet? I'll check it out.

I'll keep holding JAKK.

QuoteThere are two tests I want to make over the two following updates: 1) Listen to the latest conference call; 2) Read the latest 10-Q form filed with the SEC.

Ok, read until page 6 of the 2006 form 10-K, and so far so good. I've learned that the company still has just 12.9% of sales internationally and it is making efforts to expand its international presence. Also the company makes low price toys and products, and one thing I've been learning in Portugal is that people cut in everything they can in times of economic stress, but not in cheap toys for their children. Toys are like a first necessity good for today's parents.

JAKK trades for 10.2 times 2007 EPS guidance, but probably this undervaluation won't last long. I have little doubts JAKK will be a profitable investment for me and people that follow this recommendation. I'll continue holding JAKK.

I'm going to keep pounding the table on JAKK, since I see this stock as the 4th best of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php). I guess not many people believe it (why, because it went down 5-10% right after I bought it?), but if you take a few minutes to really check the fundamental landscape of this company, I think you'll be convinced it is a very attractive investment. Or else you can wait for a bullish breakout to new all time highs, then everybody will see it.

Today I read just page 7 of the latest 10-K form (it's weird, the weekend tires me more than the working week, my kids are really wild :)). No problems so far, quite the opposite, JAKK is a very diversified company with dozens of different products.

My valuation model tells me JAKK will be a $101.94 stock three years from now (http://www.3stocksonfire.org/fundamental.model.php?ticker=JAKK&portfolio=main). I'll continue holding JAKK.

Tomorrow we'll get some more information from JAKK, since the company will be presenting in an AG Edwards conference:

• JAKKS Pacific to Participate in Toy Industry Panel for A.G. Edwards' Leisure & Lodging Symposiu (http://biz.yahoo.com/bw/070503/20070503005299.html?.v=1)m
Business Wire (Thu, May 3)

Hopefully this will be the catalyst to take the stock to new all time highs above $29, since it is so obviously undervalued. I'll continue holding JAKK.

Unfortunately I need to make all updates today before I go to bed, and I'm really sleepy now (it is midnight where I'm standing - zzzz, I can't continue, have to wake up earlier tomorrow), so I can't listen to the AG Edwards conference now. I'll do it for tomorrow's update.

But did I tell you JAKK is an awesome pick that will soon be trading at new all time highs? I guess I did. My valuation model tells me JAKK (http://www.3stocksonfire.org/fundamental.model.php?ticker=JAKK&portfolio=main) is the 4th best stock of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php), therefore I'll continue holding it.

Ok, I've listened to the AG Edwards Toy Panel, it was interesting, but people were very cautious because after all they were talking to competitors, so there wasn't anything new.

It looks like I should compare JAKK with other companies in the toy industry, for example MAT, HAS and RCRC. I want to compare their market caps, revenue growth rate from the year ago period, gross and net profit margin, sales and earnings multiples, etc.

I'll do that over the next update (today I already spent 50 minutes with JAKK listening to that webcast), I'll keep on holding the stock.

David, I think you should definitely sell JAKK and pursue better prospects. Even though it appears to be very undervalued, it may very well remain that way, or even become more "undervalued",  IMO. I assume you haven't seen this article?

http://biz.yahoo.com/seekingalpha/070501/34069_id.html?.v=1

Quote from: BigSully1 on May 10, 2007, 06:31:05 PM
David, I think you should definitely sell JAKK and pursue better prospects. Even though it appears to be very undervalued, it may very well remain that way, or even become more "undervalued",  IMO. I assume you haven't seen this article?

http://biz.yahoo.com/seekingalpha/070501/34069_id.html?.v=1

Yeah thats what I said no growth 10 pe stock.  Should never have been selected for 3sof.

Quote from: BigSully1 on May 10, 2007, 06:31:05 PM
David, I think you should definitely sell JAKK and pursue better prospects. Even though it appears to be very undervalued, it may very well remain that way, or even become more "undervalued",  IMO. I assume you haven't seen this article?

http://biz.yahoo.com/seekingalpha/070501/34069_id.html?.v=1

The article doesn't tell me anything new. I disagree with it, especially the dividend part. It's ridiculous to say that a dividend paying stock deserves a higher earnings multiple. Read what Buffet says on the issue, he doesn't like it when companies pay dividends, because of taxes and the loss of the compounding effect.

Also, the "there's no growth" thesis isn't accurate, the company has been growing revenues and EPS. Revenues were $315 M in 2003, $574 M in 2004, $661 M in 2005 and $765 M in 2006. This is very strong growth, it doesn't matter if it was due to acquisitions or organic growth.

QuoteYeah thats what I said no growth 10 pe stock.  Should never have been selected for 3sof.

I guess TCHC would have been better (http://www.3stocksonfire.org/trading/index.php?topic=9458.msg97332#msg97332), no?

You already gave your opinion on JAKK, are you going to repeat it everyday the stock goes down? I hope not, unless you have new arguments or information.

I'll keep holding JAKK, great value with strong growth.

It's fine for you to disagree with the article David. Just thought i would put it out there, since you seemed to trying hard to figure out why the seemingly low valuation.

Most recent Q'rly rev growth below 5 yr average, while earnings growth above. Current Q earnings estimate decreased. "Value" instititutions already own 95%, who is left to buy? Insiders own very little and don't appear eager to hold. I could be wrong, sorry, just my opinion.

Quote from: BigSully1 on May 11, 2007, 09:27:36 AM
It's fine for you to disagree with the article David. Just thought i would put it out there, since you seemed to trying hard to figure out why the seemingly low valuation.

Most recent Q'rly rev growth below 5 yr average, while earnings growth above. Current Q earnings estimate decreased. "Value" instititutions already own 95%, who is left to buy? Insiders own very little and don't appear eager to hold. I could be wrong, sorry, just my opinion.

Of course BigSully, thanks for sharing your concerns on JAKK, I think you're wrong, time will tell.

JAKK is a good company,but time is not on it's side.It is cyclical and with yesterdays retail report,it does look like consumer has slowed down a little.It will probably do okay in the long run.The question is are you willing to sit for 3-6 months to get fair return as opposed to follow the bull market and get better results for your money.

David, this is going to sound like I am just bashing JAKK. I'm not. I'm really unbiased here and just trying to be helpful. I started out looking for a good reason to buy JAKK and ended up fascinated with why this stock seems undervalued. I came up with a bit more today.

Evidently, WWE - World Wrestling Entertainment has a lawsuit against a joint venture controlled by THQI and JAKK, alledging they have illegally aquired the rights to it's name and franchise.

This could put JAKK's "Wrestlemania" and and "Smackdown vs RAW" video game prospects in jeopardy, and I believe this is where the majority of JAKK's future growth prospects lie.

Perhaps there is a "risk" discount on the stock per this lawsuit? Perhaps justifiably so?

Anyway, my research on this one is done and I wont say anymore on it. Hope I didn't offend. Good luck with it.

Quote from: akclide on May 11, 2007, 10:35:13 AM
JAKK is a good company,but time is not on it's side.It is cyclical and with yesterdays retail report,it does look like consumer has slowed down a little.It will probably do okay in the long run.The question is are you willing to sit for 3-6 months to get fair return as opposed to follow the bull market and get better results for your money.

I don't think JAKK's cheap product sales will be affected by the economic slowdown in the US. Moreover the economy will probably pick up steam in the second half of the year, and most of the company's growth will come from international expansion, since international markets still account for just 12% of one year's sales.

I also believe JAKK is on the verge of a bullish breakout to new all time highs.

Quote from: BigSully1 on May 11, 2007, 05:43:22 PM
David, this is going to sound like I am just bashing JAKK. I'm not. I'm really unbiased here and just trying to be helpful. I started out looking for a good reason to buy JAKK and ended up fascinated with why this stock seems undervalued. I came up with a bit more today.

Evidently, WWE - World Wrestling Entertainment has a lawsuit against a joint venture controlled by THQI and JAKK, alledging they have illegally aquired the rights to it's name and franchise.

This could put JAKK's "Wrestlemania" and and "Smackdown vs RAW" video game prospects in jeopardy, and I believe this is where the majority of JAKK's future growth prospects lie.

Perhaps there is a "risk" discount on the stock per this lawsuit? Perhaps justifiably so?

Anyway, my research on this one is done and I wont say anymore on it. Hope I didn't offend. Good luck with it.

Of course you didn't offend BigSully1, I thank your research :)

I didn't knew about that lawsuit, but my take is the company's growth will come from international expansion, more than from product innovation (of course, it is also needed). The stock is so cheap, trading at 10 times earnings, that even if there isn't any revenue and profit growth the price per share should rise. The earnings yield is about 10%, and revenue and EPS have been very stable in the past.

BigSully, you gave us valid explanations to why JAKK is undervalued, but I think you're missing the main point which is: JAKK is undervalued. Therefore, it will rise.

I'll keep holding JAKK for the foreseeable future, it is the 4th most attractive stock of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php).

Another Stock picking website (Validea.com) selected JAKK a few weeks ago as Value Investment Stock. Their filter selected it as a stock Warren Buffet/Benjamin Graham would pick.

I am not vested in JAKK, but Wallstreet was chatting about Hasbro & Mattel this am. Both companies sell popular stuff/toys like Spiderman & Transformers, they are expected to do very well this summer.  As you know, they released a new Spiderman movie and for the first time a action figure is going to the movie box, instead of the other way around. Movie comes out, then they make action figures. I thought they had a transformer cartoon, but I am not sure.

I do not know if JAKK sells anything related to Spiderman or Transfromers, if they do, you could see an increase in sells for the 3Q.

Quote from: Fré on May 13, 2007, 10:58:47 AM
Another Stock picking website (Validea.com) selected JAKK a few weeks ago as Value Investment Stock. Their filter selected it as a stock Warren Buffet/Benjamin Graham would pick.

Yes, I think JAKK would fit their criteria, since the company has been profitable for the past 10 years and has been growing earnings steadily. It is also trading at about 10 times 2006 EPS.

Quote from: Houlahan on May 14, 2007, 11:03:47 AM
I am not vested in JAKK, but Wallstreet was chatting about Hasbro & Mattel this am. Both companies sell popular stuff/toys like Spiderman & Transformers, they are expected to do very well this summer.  As you know, they released a new Spiderman movie and for the first time a action figure is going to the movie box, instead of the other way around. Movie comes out, then they make action figures. I thought they had a transformer cartoon, but I am not sure.

I do not know if JAKK sells anything related to Spiderman or Transfromers, if they do, you could see an increase in sells for the 3Q.

I don't think so Houlahan, JAKK doesn't own the rights to those two trademarks.

As I look to my valuation model applied to JAKK, I see a reasonable picture:

1) Dilution factor of 1.01. This means I expect 1% average annual dilution going forward. Historically this number has been 1.022, but since the balance sheet got a lot stronger lately (the current ratio rose to 4.34 from 3.24 in Q4 2006) I expect just 1% going forward.

2) Revenue CAGR of 1.17. 17% average annual revenue growth seems reasonable to me, since revenue grew 15.55% in 2006, 26.3% in 2005 and 65.8% in 2004. Especially because only 12.5% of revenue comes from international markets and the company said it will increase its expansion overseas.

3) Net profit margin of 9.84%. This is the last 10 years average.

4) EPS multiple of 23.15 is the Toys & Games industry average (http://finance.yahoo.com/q/co?s=JAKK).

The company's 2007 full year guidance points to $2.39 EPS, but I believe they're being extra cautious because they disappointed investors with last year's guidance. I expect a much higher number.

I'll keep on holding JAKK.

JAKK went down another 1.73% today. I'm now losing 9% on this stock. But the technical trend is still bullish (I'm talking about the medium term trend) and fundamentals appear to be extremely attractive, since the stock is trading at 10 times conservatively estimated 2007 earnings.

I'll keep holding JAKK.

Since JAKK disappointed investors in 2006, because it published a very high guidance and then couldn't deliver it, I guess the market is afraid that something similar may happen again in 2007. But my take is management learned their lesson and issued an extremely cautious guidance for 07, just $2.39 EPS compared to $2.3 in full fiscal 2006.

So, my expectation is for JAKK to positively surprise people going forward. JAKK is the 5th best stock of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php), I'll certainly keep on holding it.

Come on JAKK, you can't be trading at 10 times earnings, come on up, don't be such a drag. I'll say "thanks" when you breakout above $27.

David if P/E of 10 is such a low multiple for JAKK then why not consider stocks like VLO which have even lower P/E and also have better technicals. Agreeably its 42B market cap but there may be others with smaller cap and similar potential. I also agree that JAKK and VLO are in different sectors but the bottom line is still $$$ potential and valuation. So it may be time to put some gas in 3SoF portfolio.

JAKKS Pacific (JAKK) JAKKS Pacific (JAKK)
Q1 Sales & EPS Exceed Our Estimates on Strength in CDI;
Maintaining Estimates and $23 Target Q1 Sales & EPS Exceed Our Estimates on Strength in CDI; Maintaining Estimates and $23 Target
April 27, 2007

Price (as of close 4/26/07)
$26.60

Rating
HOLD

12- Month Target Price
$23

Sean McGowan
(212) 938-9922
[email protected]


Company Description
JAKKS Pacific is one of the largest US
toy manufacturers, with an extensive 
array of brands, including WWE wrestling
toys and games, Fly Wheels vehicles,
Cabbage Patch Kids dolls, Doodle Bear
plush, Flying Colors writing instruments
and art supplies, Road Champs vehicles
and many others. Through a joint venture
with THQ, Jakks publishes WWE video
games. 
 



52-Week Range   $15.26–25.98 Total Debt  $98 million
Shares Outstanding    32.8 million Debt/Capital  14%
Insider/Institutional*    5%/96% ROE  12%
Public Float    26 million Cash & Inv/Share  $5.86
Market Capitalization   $871 million  Book Value/Share  $22.38
FYE DEC 2006A 2007E 2008E
EPS($) ACTUAL CURRENT PRIOR CURRENT PRIOR
Q1 Mar $0.09A $0.12A $0.09E $0.03E 
Q2 Jun   0.22A   0.30E      0.30E 
Q3 Sep   1.26A   1.31E      1.19E 
Q4 Dec   0.73A   0.64E      0.71E 
Year $2.31A $2.38E $2.35E $2.25E 
P/E Ratio 10.9x 11.2x  11.8x 
Change 0% 3.0%  -5.5% 

FYE DEC 2006A 2007E 2008E
Revenue ($ mil.) ACTUAL CURRENT PRIOR CURRENT PRIOR
Q1 Mar $107.8A $124.1E $120.0E $117.0E 
Q2 Jun   124.0A   140.0E      145.0E 
Q3 Sep   295.8A   281.0E      260.0E 
Q4 Dec   238.3A   219.9E   219.0E   218.0E 
Year   765.9A $765.0E $760.0E $740.0E 
Change 15.8% -0.0%  -3.3% 

Numbers may not add up due to rounding.
* Ownership may exceed 100% due to the nature of public filings.

• Q1 EPS of $0.12 vs. our estimate of $0.09 and $0.09 last year.  EPS exceeded guidance of $0.07-0.10 and
consensus of $0.08.  We believe that all of the upside came from CDI, and that on a pro-forma basis, sales and
EPS would likely have been flattish.
• CDI continues to drive top line performance.  Reported sales were $124.1 million. $4.1 million above our
estimate.  As has been the case for the past few quarters, the strength has been mainly in CDI, acquired in mid
Q1'06.  Excluding CDI revenues, sales in Q1'07 would have been essentially flat, which is an improvement over the
past few quarters.  Increases in WWE toys, TV Games and the inclusion of several new lines, notably Pokemon
offset decreases in Cabbage Patch, Fly Wheels, Doodle Bear, writing instruments and seasonal products.
• Gross margins fell, but other expenses fell more, pulling up operating margins.  COGS rose 300 bps.  Higher
royalty and amortization expenses pulled overall gross margins down 430 basis points. Direct selling expenses
were down 360 bps vs. a year ago, SGA was down 30 bps, and other depreciation and amortization was down 100
bps.  As a result, operating margins were 60 bps higher than last year and 40 bps higher than our estimate.   
• Raising 2007 revenue estimate from $760.0M to $765.0M and 2007 EPS estimate from $2.35 to $2.38.  The
increases in 2007 estimates are wholly due to the variance in Q1; all subsequent quarters remain unchanged.  Our
2008 EPS estimate remains $2.25, and we are introducing a 2009 EPS estimate of $1.95.  All figures exclude
acquisitions.
• Maintaining HOLD rating and target price of $23. Our target price is just over 10x our 2008 EPS estimate of
$2.25. More meaningfully, it represents about 13 times our estimate of EPS excluding WWE sales and JV profits,
plus a discounted value of those profits from now until the end of 2009, when the licenses expire. Because of the rift
between JAKK and WWE, we expect WWE to terminate the contract as soon as possible, mandating that profits
from the license be considered separately from ongoing profits.  The target multiple of 13 times ongoing EPS
represents a discount of 25% to 30% to our target multiples for MAT and HAS, respectively. We view this discount
as heavy but warranted, as we don't believe JAKK should receive a P/E that larger toy companies with more stable
revenue sources enjoy and given risks related to replacing hit toy revenues as well as to the ongoing WWE
T
o
y

litigation. We estimate the WWE license contributes an average of $0.50 per share to the company's annual
earnings.
• Risks to attainment of our share price target include loss of key licenses, poor sell-through of new products, and
unfavorable developments in its legal battle with WWE.

Q1 DETAILS
Total sales rose 15.1% to $124.1M, higher than our $120.0M estimate of the consensus of $118.7M.  If
you include CDI in Q1:06's sales, the increase is reduced to 3.4% (from $120.0M to $124.1M).  Excluding
CDI sales from both periods, sales would have been flat at $97 million. 
CDI.  Sales were $27M vs. $23M in Q1:06, up 17.4%.  The company's most recent acquisition continues
to surprise on the upside, making one of the more prudent acquisitions in the company's history.
Traditional toys (TV Games, Cabbage Patch, WWE, Care Bears, Speed Stax, Telestory and many
others) excluding CDI. We believe that domestic sales of traditional toys were flat at about $50 million,
although this is difficult to ascertain, since the company no longer reports US sales by category; rather it
aggregates worldwide sales by category.  Worldwide, we estimate traditional toy sales excluding CDI
were up about 4%.   
Seasonal/XPV.  Sales of seasonal and XPV were up down 3.5%, worldwide from $8.5M in Q1:06 to
$8.2M.  Domestically, we believe the division may have been closer to flat. 
Art/Writing products (mostly Pentech and Flying Colors). Worldwide sales of writing products fell
30% in the quarter, and we believe they decreased 22.0% domestically to $9.2M from $11.8M a year ago.
This line continues to deteriorate and is a shadow of its former size (e.g., US sales in Q1:03 were
$24.5M).
Pets/Other.  Sales of Pets and other, while small as a percentage of total sales, were up 82.6%, from
$2.3M in Q1:06 to $4.2M.  We believe these sales are essentially all domestic.
International.  International sales rose 17% to $16.9M from $14.5M, partly reflecting the full-quarter
contribution of CDI.
WWE JV.  JAKK's share of the video game joint venture with THQ posted a gain of $1.5M vs. a gain of
$0.8M a year ago.  As we have noted in the past, JAKK is currently in dispute with THQI over how to split
the profit from the JV.  The old agreement expired at the end of June, 2006, and the two parties have
been unable to come to a new agreement. If the arbitrators resolve the dispute in a manner unfavorable
to JAKK, the company may need to back out previously booked profit.  If the matter is resolved in JAKK's
favor, no adjustment would be needed.  Either way, it would be cash-positive event, since currently, JAKK
is not receiving cash from THQI, but would receive a slug of cash (to be determined by the terms of the
split) from the settlement.   
Gross margin contracted from 41.0% in Q1:06 to 36.7% reflecting 300 bps of COGS increase as a
percentage of sales.  Gross profit dollars were below our estimate.
The primary expense beat was Direct Selling Expense, which was down 360 bps as a percentage of
sales year-over-year to 9.5% vs.13.1% in Q1:06.
Net income was $3.2M in the fourth quarter vs. $2.3M in the year-ago period, resulting in EPS of $0.12
vs. $0.09, respectively, and compared to our estimate of $0.09. 
Accounts receivable fell in relationship to year-over-year sales.  Measured in days sales outstanding,
accounts receivable stood at 54 days at the end of the quarter, compared to 57 a year ago.  This
improvement is probably at least partly due to the fact that year earlier, JAKK did not have CDI sales for
the whole quarter, but its receivables were included in full at the end of the quarter.  DSO's at the end of
Q1 were about 51 days, for example.  Still, the improvement is notable considering the growing
receivable for the cash to be collected from THQI for the JV profits.   
Overall, JAKK's balance sheet is very strong, with $192M in cash, and debt of only $98M, all of which
comes from an in-the-money convertible debenture.  The company is in excellent condition to deploy
cash for acquisitions, share buybacks, or dividends, should it choose to.  We expect free cash flow in
2007 to be about $2.50 per share.

ESTIMATES AND TARGET
We have increased our 2007 EPS estimate to $2.38, simply incorporating the $0.03 positive variance in
Q1 and leaving future quarters essentially unchanged.  Our full-year 2007 revenue and EPS estimates
are now increased to $765M and $2.38, respectively.  Our 2008 revenue and EPS estimates are
unchanged at $740M and $2.25, respectively, and we are introducing 2009 sales and EPS estimates of
Sean McGowan (212) 938-9922  JAKKS Pacific | 3


$700 million and $1.95, respectively.  We believe that excluding acquisitions, JAKK will see revenues and
profits fall in the future.  This, we believe, has been the case for most of the company's history.  What has
also been the case for most of the company's history is that the company does make acquisitions, having
made at least 12 in its 11 year history.  We assume this will continue, but since we cannot know the target
or the timing, we have not incorporated acquisitions into our model.
We are maintaining our target price of $23, which represents 10.2x our 2008 EPS.  While this may appear
low relative to our EPS estimates, we remind investors that we foresee substantial risk for the following
reasons:   
1. Heavy dependence on a few items, especially WWE, which could be tenuous given the
uncertainty surrounding the WWE litigation as well as the dispute with THQI about how to split the
profit.   
2. In addition, the need to replace such a high portion of revenues and the fact that without
acquisitions, there has been no growth over the years argues for a discount, as well.  Clearly the
balance sheet is strong, but if the cash needs to be deployed to buy revenue, the balance sheet
could weaken over time.  Moreover, the company may seek to retain cash to meet obligations
that may arise in connection with its WWE litigation (either in settlement or as a penalty), which
could reduce the amount available for acquisitions.   
3. Finally, we do not believe it is prudent to apply any multiple to profits that derive from WWE, since
it is possible that the company may lose this source of profits soon.  The licenses expire at the
end of 2009, which would, in our view, be the latest these profits would disappear.  Alternatively,
an adverse legal decision could result in a quicker drop.   
Our valuation approach is to apply a P/E of about 13 times to the non-WWE portion of JAKK's profits.  We
estimate that between profits on its sales of WWE toys, and its average share of profit from the THQI JV,
WWE accounts for about $0.50 per share of JAKK's annual EPS.   
A year from now, we expect investors to looking forward 12 months when evaluating toy stocks, so we
believe a 12-month target should be based on earnings for the 12 months ending June, 2009.  For that
period, we expect JAKK to show EPS of $2.15, assuming no loss of WWE profits.  Subtracting the $0.50
per share from that figures yields $1.65 in non WWE EPS.  We believe a multiple of 13-14 could be
justified.  We believe a discount to the P/E's of Hasbro and Mattel is warranted, given those companies'
more stable sources of ongoing revenue, their less uncertain legal situations, and their outright ownership
of dominant brands. Those stocks are currently selling at around 18 times leading 12-month EPS, so we
believe a P/E of 13.5 times leading 12-month EPS is a heavy but warranted discount for JAKK.
If we apply a P/E of 13.5 times non-WWE EPS, and add back the $0.75 in WWE profit expected to be
achieved between now and the end of the WWE license, we arrive at our target price of $23.   

Thanks for this extensive article on JAKK yukiii, it is quite informative. This material needs to be discussed over several updates.

Today I'm going to concentrate on two issues, the analyst's estimates and the WWE litigation.

QuoteWe have increased our 2007 EPS estimate to $2.38, simply incorporating the $0.03 positive variance in Q1 and leaving future quarters essentially unchanged.  Our full-year 2007 revenue and EPS estimates are now increased to $765M and $2.38, respectively.

This analyst's views are below average:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37008;image)

And they're below the company's internal guidance:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37009;image)

So, "your" analyst is on the pessimistic side, I'm more on the average, or realistic, side.

QuoteMaintaining HOLD rating and target price of $23. Our target price is just over 10x our 2008 EPS estimate of $2.25. More meaningfully, it represents about 13 times our estimate of EPS excluding WWE sales and JV profits, plus a discounted value of those profits from now until the end of 2009, when the licenses expire. Because of the rift between JAKK and WWE, we expect WWE to terminate the contract as soon as possible, mandating that profits from the license be considered separately from ongoing profits.  The target multiple of 13 times ongoing EPS represents a discount of 25% to 30% to our target multiples for MAT and HAS, respectively. We view this discount as heavy but warranted, as we don't believe JAKK should receive a P/E that larger toy companies with more stable revenue sources enjoy and given risks related to replacing hit toy revenues as well as to the ongoing WWE litigation. We estimate the WWE license contributes an average of $0.50 per share to the company's annual earnings.

The analyst is discounting that everything will go wrong for JAKK. If you do this exercise to all publicly traded companies you'll get to the conclusion that they're all expensive and unattractive.

Let's see what the company says about the WWE litigation:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37010;image)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37011;image)

It doesn't seem obvious to me that WWE will win the case. Moreover, WWE's claims are only for Japan and other Asian countries. Well, Japan and Asia accounted for just 2.75% of the company's total sales (ex-Hong Kong). If we think of just WWE related toys, we'll see that the dispute is around just 1% of sales or so. I don't think it is legitimate to expect WWE to end the contract with JAKK in 2009, just because of this small dispute. Companies can litigate and continue to do business together, if that's in their best interests, especially when the issue in question isn't all that much relevant in the bigger scheme of things.

JAKK has its problems, like most companies. But I believe it is unfair to price it at 10 times earnings, the stock is too cheap. I expect the market to take JAKK to new highs sooner rather than later.

Quote from: stocky on May 17, 2007, 09:39:21 PM
David if P/E of 10 is such a low multiple for JAKK then why not consider stocks like VLO which have even lower P/E and also have better technicals. Agreeably its 42B market cap but there may be others with smaller cap and similar potential. I also agree that JAKK and VLO are in different sectors but the bottom line is still $$$ potential and valuation. So it may be time to put some gas in 3SoF portfolio.

Hi stocky, thanks for the suggestion, but I don't see all that much gas in VLO, since, as you say, it is already a $42 B market cap. JAKK belongs to the Toys & Games industry, which is trading at 21 times earnings. VLO belongs to the Oil & Gas Refining & Marketing industry, which is trading at 11 times earnings. So, JAKK trading at 10 times earnings would have to rise 110% to get to the industry average. VLO trading at 8 times earnings would have to rise 37.5% to get to its industry average. But VLO is also attractive, good luck stocky :)

I'll continue holding JAKK, come on JAKK !!!

I don't have much time today to go deeper on JAKK's, let me just say that the stock needs just one more step upward to cross above the short term resistance level. Volume has been picking up considerable, JAKK just needs to close above $24.64 to breakout.

I'll keep holding JAKK.

JAKK, you're the man!!! Still not in the "thanks" zone, but getting closer, getting closer. Nice breakout on volume above average, enough of this 10 times earnings multiple and this "there's no organic growth" talk. There's revenue and EPS growth, it doesn't matter if it has been achieved through organic growth or acquisitions, the fact is that it exists.

Come on JAKK, come on!

JAKK, you just need to rise $2 more to please me (I'll say "thanks") and to cry out loud "I'm undervalued, start buying".

The chart has turned bullish, I expect the positive short term trend to continue.

Jakk is holding up very nicely :)

Quote from: wxmang on May 24, 2007, 03:18:21 PM
Jakk is holding up very nicely :)

Yes wxmang, JAKK attempted to rally early in the session but then the general market negativity took it down a bit. But it sure wants to go higher, since it is undervalued (the reasons for being undervalued is another matter, I don't think they're warranted).

I'll keep on holding JAKK.

People have this negative view about JAKK, that's why the stock is trading at 10.9 times 2006 EPS and at 10.4 2007 estimated EPS, while the toys industry trades at 25.9 times earnings:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37312;image)

But, over the past three quarters JAKK beat analysts estimates, and by 50% in Q1 2007:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37313;image)

And that has been forcing analysts to push those estimates upwards:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37314;image)

In terms of a PEG comparison, JAKK is much more attractive than its industry average:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37315;image)

Look how expected growth for the next 5 years is similar, between JAKK and its sector, and yet JAKK trades at half the earnings multiple.

All this leads me to believe that JAKK will make a move and breakout above $27 sooner rather than later. I see the company surprising on the upside due to international expansion (JAKK only sells 12% internationally).

Technically the stock has been consolidating on declining volume. Getting ready for another bull leg, after the recent technical breakout. I'll keep holding JAKK.

Nobody loves you JAKK, but I do :-* So you keep pushing higher and breakout above $27 so I can say "thank you"!

JAKK is trading at 11 times trailing earnings and it has been growing steadily, it doesn't matter if it was through acquisitions or organic growth, because there's wasn't any dilution either. This stock was punished because management had a very optimistic guidance for 2006 and then failed to deliver. But they've learned their lesson and were extremely cautious at their 2007 guidance, so we now have the beautiful setup of a cheap company that is about to surprise on the upside.

I'll keep on holding JAKK with strong hands.

After being losing about 10% on this stock and a lot of criticism, I'm in the green with JAKK now. As I've been saying, one shouldn't care about the first 10% up or down, that's just unpredictable short term noise.

I'm not going to say "thank you JAKK" right away because the stock needs to breakout above $27 for me to do that. But it sure looks like it's coming. The stock isn't all that far away from an all time high, if you check the long term chart. A crossover of $30 would be a massive breakout, then everybody and his mother will see how undervalued this company is.

I mean, a true American, always profitable and growing company trading at 11 times earnings? Not many like JAKK in this market of stocks.

I'll keep holding JAKK.

Its trades like these that sets David apart from the pack. Applaud.

I second that, Stocky.

JAKK up yesterday, article came out said it would double based on PE, Maybe David wrote it. just joking!
I would sell.......

Quote from: stocky on May 30, 2007, 09:06:39 PM
Its trades like these that sets David apart from the pack. Applaud.

Quote from: berloga on May 31, 2007, 10:05:22 AM
I second that, Stocky.

Thanks stocky and berloga, we'll see how JAKK's trade ends, still too early to tell. But it's better now than a couple of weeks ago :)

Quote from: yukiii on May 31, 2007, 02:24:51 PM
JAKK up yesterday, article came out said it would double based on PE, Maybe David wrote it. just joking!
I would sell.......

That's interesting yukiii, do you have a link for that article? Thanks.

JAKK hit the $26.81 resistance level and couldn't hold the line, too many people were holding the stock in that area, thinking "just waiting to sell at even". I don't think selling is a wise decision, because, after all, JAKK is an American company, with just 12% of sales in international markets, looking for expansion in those markets. The company forecasts $2.39 EPS for fiscal 2007 after earning $2.3 in fiscal 2006 (I believe their guidance is conservative, because they're afraid of disappointing the market, like they did throughout 2006, when they gave a very aggressive guidance and then couldn't deliver).

By the way, I notice that analysts raised expectations just a bit over the past 7 days:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37484;image)

They're now expecting $2.4 for 2007 and $2.49 for 2008. For Q2 2007 they're calling for $0.24 EPS, and Q2 2006 EPS was $0.22.

I'll continue holding JAKK.

Quite simply, Jakks trades too cheaply compared with other toy companies such as Mattel (MAT - Cramer's Take - Stockpickr) and Hasbro (HAS - Cramer's Take - Stockpickr). The third-largest domestic toy company has some warts, including a World Wrestling Entertainment (WWE - Cramer's Take - Stockpickr) lawsuit that might cost some cash and modest earnings.

However, its 10 P/E and 5 EBITDA multiples more than discount most unfavorable legal outcomes. Otherwise, the company has done an excellent job acquiring small, niche toy businesses and growing them. Expect double-digit revenue and earnings growth this year and a much better valuation level for the shares. A 15 P/E ratio in a 19 P/E market gets the shares 50% higher.

Quote from: yukiii on June 01, 2007, 03:19:47 AM
Quite simply, Jakks trades too cheaply compared with other toy companies such as Mattel (MAT - Cramer's Take - Stockpickr) and Hasbro (HAS - Cramer's Take - Stockpickr). The third-largest domestic toy company has some warts, including a World Wrestling Entertainment (WWE - Cramer's Take - Stockpickr) lawsuit that might cost some cash and modest earnings.

However, its 10 P/E and 5 EBITDA multiples more than discount most unfavorable legal outcomes. Otherwise, the company has done an excellent job acquiring small, niche toy businesses and growing them. Expect double-digit revenue and earnings growth this year and a much better valuation level for the shares. A 15 P/E ratio in a 19 P/E market gets the shares 50% higher.

Thanks for that article yukiii (applaud). In fact the toys & games industry trades at 27.54 times earnings (http://finance.yahoo.com/q/co?s=JAKK) (while JAKK is now trading at 11 times).

Today I was watching TV, the Panda channel (similar to your Disney channel), my kid wasn't paying any attention, playing around with his cars. Suddenly commercials started and some WWE dolls popped on the screen, my kid jumped and said: "I want that!"

Only 4.2% of JAKK's sales come from Europe, but I believe that share will expand in the future.

Also, the lawsuit everybody keeps talking about, is just about sales of WWE video games in Japan and other Asian countries:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37548;image)

Now, Japan and other Asian countries account for less than 2% of the company's sales. So I don't see what's the big problem, or why would WWE terminate its agreement with JAKK just because of this almost irrelevant part of the world in terms of sales for the company. My opinion is companies many times litigate over the most various aspects, but that doesn't mean they'll end a mutually beneficial relationship because of a minor issue.

Technically it still isn't time for me to say "thank you JAKK", that's going to happen only when the stock is able to close clearly above $27. Perhaps next week. I'll continue holding JAKK.

Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!
Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!
Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!
Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!
Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!
Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!
Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!
Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!! Thank you JAKK !!!

Analyst Jeffrey Blaeser of Morgan Joseph initiates coverage of JAKKS Pacific Inc (JAKK.NAS) with a "buy" rating. The target price is set to $29.

In a research note published this morning, the analyst mentions that the company has the potential to become the fourth largest toy manufacturer in the US due to its growth. JAKKS Pacific has the ability to make further acquisitions going forward, driven by its cash on the balance sheet that exceeds debt by $94 million and by its free cash flows that are likely to approach $100 million annually, the analyst says. JAKKS Pacific's low-cost, high-margined products are attractive, and enable the company to develop robust client relationships, Morgan Joseph adds.

Quote from: yukiii on June 06, 2007, 01:09:40 AM
Analyst Jeffrey Blaeser of Morgan Joseph initiates coverage of JAKKS Pacific Inc (JAKK.NAS) with a "buy" rating. The target price is set to $29.

In a research note published this morning, the analyst mentions that the company has the potential to become the fourth largest toy manufacturer in the US due to its growth. JAKKS Pacific has the ability to make further acquisitions going forward, driven by its cash on the balance sheet that exceeds debt by $94 million and by its free cash flows that are likely to approach $100 million annually, the analyst says. JAKKS Pacific's low-cost, high-margined products are attractive, and enable the company to develop robust client relationships, Morgan Joseph adds.

A positive review of JAKK, how interesting. Finally someone else is seeing the glass half full :)

The stock had an healthy pullback yesterday, re-testing the support (prior resistance), of $26.81.

I wanted to show you some of JAKK's toys and games, but its website, www.jakkspacific.com is down now. Tomorrow I'll show you, my kid loves the WWE toys.

I'll continue holding JAKK.

Great presentation at Pipper Jaffray from JAKK. Have you ever heard of Hannah Montana? Seems like a big deal for kids, and management sees a lot of upside potential from related products made by JAKK. Listen the presentation at the company's website:

www.jakkspacific.com

I've selected a few slides for you:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37746;image)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37747;image)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37748;image)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37749;image)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37750;image)

I believe the Declining Acquisition Amortization = Increased Earnings slide is important. Also, at the end of the Q&A session, I enjoyed what the CEO said about acquisitions: "We made 12 acquisitions over our 11 years of existence, and we'll keep doing them because we're pretty good at it".

About the ongoing litigation, management said the issue was about Japan, and they didn't heard anything new from the court for 10 months.

Technically the stock is doing what it should be doing, given the very attractive fundamentals. I'll keep holding JAKK.

Nice interview from JAKK at WallSt.net:
http://wallst.net/audio/audio.asp?ticker=JAKK&id=3452

What I've learned in this interview was:

- The CEO of JAKK's actually created the very first WWE action figure, 25 years ago. JAKK used to be known as the WWE toy company. And now analysts say this very long term relationship will end because of a dispute in Japan and other Asian countries, an area of the globe that represents less than 2% of the company's sales;
- JAKK doesn't own any factories, it contracts production with 60 - 80 different factories around the world. So, for those of you that could have been thinking: "but the Chinese will always produce lower priced toys", it seems like JAKK's products also get to the stores with the "Made in China" label;
- Hannah Montana and Cheetah girls toys can be huge hits when they hit the shelves in a few months from now;
- Genna said: "Our guidance of $800 M in sales in 2007 is the very minimum", so expect the company to beat its internal guidance, as I've been writing.

I really like this plug & play games ideia: http://www.jakkstvgames.com/

I don't know anything like it in Europe, and I believe it would be a big success. Check out Spiderman game, it's so simple, just terrific in my view: http://www.jakkstvgames.com/spiderman.html

The product is sold out at Amazon, and costumer reviews are positive: Spiderman Plug it & play TV game costumer reviews (http://www.amazon.com/gp/product/customer-reviews/B0001NE40I/sr=11-1/qid=1110237067/ref=cm_cr_dp_pt/105-3746473-8315629?ie=UTF8&n=165793011&s=toys-and-games&qid=1110237067&sr=11-1#customerReviews)

(I was going to buy it for my kid ;D. Monday I'll try again, or maybe another TV game from JAKK's).

I'll keep holding JAKK, massively undervalued at this point, trading at 11 times earnings.

I went to ToysRUs yesterday, here in Lisbon. They had the WWE action figures from JAKK, but still not those plug it and play TV games (what I wanted). It's probably just a matter of time.

I believe I've covered all relevant aspects of JAKK and I'm pretty sure the stock will go up from here. But as I look to the Main Portfolio, I see just 5.4% of capital allocated to JAKK, I probably made some calculus mistake when figuring out the size of the position.

I'm going to buy 2% of capital more in JAKK at tomorrow's open.

Analyst Jeffery Blaeser of Morgan Joseph maintains his "buy" rating on JAKKS Pacific Inc (JAKK.NAS). The target price is set to $29.

In a research note published this morning, the analyst mentions that the company holds exclusive US rights to action figures, play sets, accessories and other products at the Pokemon boutique, which will remain open until July 5. Contribution from JAKKS Pacific's new Pokémon license is likely to be the highest among the company's categories, if JAKKS toy sales are as robust as those of Pokémon Diamond and Pokémon Pearl, the analyst says. The market acceptance of the Hannah Montana product line is high and the contribution from this toy license to the company's top-line is likely to increase substantially over the next two-to-three years, Morgan Joseph adds.

Quote from: Houlahan on May 14, 2007, 11:03:47 AM
I am not vested in JAKK, but Wallstreet was chatting about Hasbro & Mattel this am. Both companies sell popular stuff/toys like Spiderman & Transformers, they are expected to do very well this summer.  As you know, they released a new Spiderman movie and for the first time a action figure is going to the movie box, instead of the other way around. Movie comes out, then they make action figures. I thought they had a transformer cartoon, but I am not sure.

I do not know if JAKK sells anything related to Spiderman or Transfromers, if they do, you could see an increase in sells for the 3Q.

I don't think so Houlahan, JAKK doesn't own the rights to those two trademarks.

[/quote]

So, David, just curious, did JAKK buy the rights to the Spiderman trademark??
Sounds like JAKK will have a great summer, along with MAT and HAS. Great find David.

Maybe I need to buy!

QuoteSo, David, just curious, did JAKK buy the rights to the Spiderman trademark??

hehe, you really like Spiderman Houlahan. Well, I believe your question is related to Spiderman related toys we all see at ToysRus, those are not made by Jakks Pacific. They just have this "plug it and play it" TV game related to Spiderman, I believe.

QuoteSounds like JAKK will have a great summer, along with MAT and HAS. Great find David.

Maybe I need to buy!

Maybe you need Houlahan :)

What do you think of Hannah Montana, ever heard of her?

As planned, I bought some more JAKK yesterday at $26.54, and now have 7.3% of the Main Portfolio in JAKK. I'll keep holding JAKK with strong hands.

JAKK moves slowly, and now it is making perhaps a 50% correction of the previous 17% rise. No big deal. I'll keep holding JAKK.

Support for Jakk is $25

Quote from: David Randolph on June 12, 2007, 05:03:28 AM

QuoteSo, David, just curious, did JAKK buy the rights to the Spiderman trademark??

hehe, you really like Spiderman Houlahan. Well, I believe your question is related to Spiderman related toys we all see at ToysRus, those are not made by Jakks Pacific. They just have this "plug it and play it" TV game related to Spiderman, I believe.

QuoteSounds like JAKK will have a great summer, along with MAT and HAS. Great find David.

Maybe I need to buy!

Maybe you need Houlahan :)

What do you think of Hannah Montana, ever heard of her?

No David, I have not heard of Hannah Montana, but I recognize the actress. She is very good. Disney has a jam up website. http://tv.disney.go.com/disneychannel/hannahmontana/  (http://tv.disney.go.com/disneychannel/hannahmontana/) It is very interactive.

I love Spiderman. You make me blush. ;)

Yes, I was referring to action figures originally. So, JAKK can use the Spiderman name? I would have thought the name was a service mark or trademark name. Not important. What is important is that JAKK sales will fly through the air like Spiderman! I love that JAKK jumped on the wagon with a plug and play game.  Kids love playing video games. Let us know if you find a  plug and play at the store and how your kid likes it.

Thank you David for your hard work during hard times. This website has educated me and saved me time. Thanks 

QuoteNo David, I have not heard of Hannah Montana, but I recognize the actress. She is very good. Disney has a jam up website. http://tv.disney.go.com/disneychannel/hannahmontana/  It is very interactive.

JAKK is going to launch Hannah Montana's dolls, pens and all sort of related merchandising. Initial studies say it's going to be a blockbuster this summer, I hope so.

QuoteI love Spiderman. You make me blush.  ;)

Yes, I was referring to action figures originally. So, JAKK can use the Spiderman name? I would have thought the name was a service mark or trademark name. Not important. What is important is that JAKK sales will fly through the air like Spiderman! I love that JAKK jumped on the wagon with a plug and play game.  Kids love playing video games. Let us know if you find a  plug and play at the store and how your kid likes it.

hehe, let me see if they already have it at Amazon. Yes, they have it now (http://www.amazon.com/Spider%252dMan-Plug-%2591n-Play-Game/dp/B0008JIM3A/ref=sr_1_2/105-2054545-4887639?ie=UTF8&s=toys-and-games&qid=1181769255&sr=8-2). I'll order it from Amazon UK, then I'll report how good the game is.

QuoteThank you David for your hard work during hard times. This website has educated me and saved me time. Thanks

It has been a valuable learning experience for me too. Thank you for your support :)

Technically JAKK had a nice 4.26% rally today, and volume was splendid. I'll keep holding.

A FORM-4   Statement of changes in beneficial ownership of securities was filed today.

Sorry, I can not see the address to link.

Thanks David for the link. I am deleting the information I had, because you created the link.

I love JAKK website and products. They have some fun games.
I did not buy the stock. >:( Now it has gone up almost $2. Enjoy the ride everyone. :D

QuoteA FORM-4   Statement of changes in beneficial ownership of securities was filed today.

Sorry I'm having a dumb blonde moment. I do not see the address to link. So, I just copy and past the information. I hope someone can help me out.

No problem Houlahan, here's a link: JAKK Form 4 (http://www.sec.gov/Archives/edgar/data/1009829/000114420407031605/xslF345X02/v078305_ex.xml)

What happened here was that the Chairman and CEO of Jakks, Mr. Jack Friedman, bought options to buy 175,000 shares at $16.25. He paid those options with shares he already had, valued at $26.42. Those shares, 107,637 in total, will probably be treated like the company had made a buyback of its own shares.

So, basically he exchanged 107,637 shares for 175,000 shares, according to the company's 1995 Employee Stock Option Plan. He can't sell them right away, there are restrictions:

«5. The Holder has agreed with the Issuer that the shares of common stock obtained through the exercise of the option reported herein shall be subject to the following restrictions on resale: none of such shares may be sold prior to June 11, 2009 and not more than 50% (i.e., 87,500) of such shares may be sold prior to June 11, 2010.»

Technically JAKK closed at a new 52 week high, and it will face some very important resistances ahead, mainly the $28.5 long term descending trendline and the $29.33 all time high, printed in October 26th, 1999.

I believe that JAKK's fundamentals are much more attractive now than what they were in the past and certainly the stock should move higher and breakout to a new all time high, reaching $30 for the first time in history.

Nothing new happened for JAKK, not from a technical or fundamental standpoint. I'll keep holding.

Finally something to smile about, JAKK closed at a new high today. And this was against all odds, at least according to some here.

Definitely the market is saying JAKK's bears are wrong, at least in my view. Just another small step and JAKK will be rewarded with a new all time high, and it sure deserves it!

There was some news out, but it isn't all that relevant, because JAKK is a very diversified company:

• JAKKS Pacific(R) Signs Master Toy License With Big Tent Entertainment for the Wiggles Brand (http://biz.yahoo.com/prnews/070618/lam044.html?.v=95)
PR Newswire (Mon 9:00am)

I'll keep holding JAKK with strong hands.

JAKK touched its long term resistance level on volume above average, and it is just 3% shy of a new all time high. Given the very attractive fundamentals of the business, I have no doubts that the stock will breakout to a new all time high sooner ratter than later.

JAKK looked at $29, but then sold off in tandem with the general market. I think it is just a matter of time before we see JAKK above $30, because the stock is trading at just 11.7 times 2007 estimated earnings of $2.39 per share and I believe the company will beat those estimates.

NEW YORK, June 20  - Analyst Jeffery Blaeser of Morgan Joseph maintains his "buy" rating on JAKKS Pacific Inc (JAKK.NAS). The target price is set to $29.

In a research note published yesterday, the analyst mentions that the company has announced a North American Master Toy licensing agreement for the production of a line of toys, based on the themes and the characters of The Wiggles. This new line is set to be unveiled in the fall of 2008, the analyst says. The addition of new lines by JAKKS Pacific is expected to diversify the company's product line further and drive sales in 2008, Morgan Joseph adds.

Might be a good time to take profits in JAKK looks over bought.

Quote from: yukiii on June 21, 2007, 07:18:54 PM
NEW YORK, June 20  - Analyst Jeffery Blaeser of Morgan Joseph maintains his "buy" rating on JAKKS Pacific Inc (JAKK.NAS). The target price is set to $29.

In a research note published yesterday, the analyst mentions that the company has announced a North American Master Toy licensing agreement for the production of a line of toys, based on the themes and the characters of The Wiggles. This new line is set to be unveiled in the fall of 2008, the analyst says. The addition of new lines by JAKKS Pacific is expected to diversify the company's product line further and drive sales in 2008, Morgan Joseph adds.

Might be a good time to take profits in JAKK looks over bought.

Hey Yukiii
what do you base your decision on?? You say it is time to take profits.
Your not looking at just one perspective are you? Like RSI?
I'm sure you know using RSI that large surges and drops in the price of a stock will affect the RSI by creating false buy or sell signals. The RSI is best in complement to other stock monitoring tools.

Or, are you taking the Analyst Jeffery Blaeser of Morgan Joseph's target price of $29 and looking at the close for JAkk today of $28.43 and saying geeee only 57 cents until it reaches the target price! Time to take profits.

This is shallow thinking for you. You need to back up a strong statement like "maybe a good time to take profits" with some facts. This will help me to understand how you derived to that conclusion. Thanks for your help.

Quote from: yukiii on April 27, 2007, 04:20:16 PM

Quote from: David Randolph on April 27, 2007, 03:50:48 PM

Quote from: yukiii on April 27, 2007, 02:00:49 PM
Hmmmmm
I been in and out of JAKK for the past 7 years.
Its overvalued at $25 not much growth here.
Will go up some end of year Passssss

There has been growth. But with a trailing P/E of 11 you don't need growth. Why do you say it is overvalued?

Thanks :)

It always trends down in May till October then its a buy, probably going to $22 then back up again to$27.

$2.30 last year $2.39 this year and that the whole story. Timing is wrong.........

Yukii,

I don't understand your reasoning on your statements! I think we all want to hear different opinions or angles that are not looked at but you seem to make suggestions without any thought process as to why.

We all appreciate a different view but please bring your reasonings with you.
I'm glad I did not take your first recomendation to sell because you thought the timing was all wrong.

Brad

thank you Brad that was nicely said. :)
I did not mean to sound so sharp, sorry Yukiii

Quote from: Houlahan on June 21, 2007, 09:50:32 PM
thank you Brad that was nicely said. :)
I did not mean to sound so sharp, sorry Yukiii

I thought you knew already. I didn't like the stock when David picked it at $26.36, it then went to $23.85. I think its at full value at $28 right now as I stated before in the thread. Just my opinion I could be wrong. Stochastic turning Neg..  A black candle tomorrow would confirm it. But I guess if you are holding for 3 years none of this matters. I only think short term. I think 8% profit or 13% if you bought it on the dip is pretty good for JAKK short term. I don't think you will get much more with there numbers.

Quote from: Houlahan on June 21, 2007, 09:37:18 PM

Quote from: yukiii on June 21, 2007, 07:18:54 PM
NEW YORK, June 20  - Analyst Jeffery Blaeser of Morgan Joseph maintains his "buy" rating on JAKKS Pacific Inc (JAKK.NAS). The target price is set to $29.

In a research note published yesterday, the analyst mentions that the company has announced a North American Master Toy licensing agreement for the production of a line of toys, based on the themes and the characters of The Wiggles. This new line is set to be unveiled in the fall of 2008, the analyst says. The addition of new lines by JAKKS Pacific is expected to diversify the company's product line further and drive sales in 2008, Morgan Joseph adds.

Might be a good time to take profits in JAKK looks over bought.

Hey Yukiii
what do you base your decision on?? You say it is time to take profits.
Your not looking at just one perspective are you? Like RSI?
I'm sure you know using RSI that large surges and drops in the price of a stock will affect the RSI by creating false buy or sell signals. The RSI is best in complement to other stock monitoring tools.

Or, are you taking the Analyst Jeffery Blaeser of Morgan Joseph's target price of $29 and looking at the close for JAkk today of $28.43 and saying geeee only 57 cents until it reaches the target price! Time to take profits.

This is shallow thinking for you. You need to back up a strong statement like "maybe a good time to take profits" with some facts. This will help me to understand how you derived to that conclusion. Thanks for your help.

How about a company growing 2.4 to 5% and maybe 10% next year and a historic pe of 11. That makes it fully valued again.

Quote from: basanlas on June 21, 2007, 09:44:44 PM

Quote from: yukiii on April 27, 2007, 04:20:16 PM

Quote from: David Randolph on April 27, 2007, 03:50:48 PM

Quote from: yukiii on April 27, 2007, 02:00:49 PM
Hmmmmm
I been in and out of JAKK for the past 7 years.
Its overvalued at $25 not much growth here.
Will go up some end of year Passssss

There has been growth. But with a trailing P/E of 11 you don't need growth. Why do you say it is overvalued?

Thanks :)

It always trends down in May till October then its a buy, probably going to $22 then back up again to$27.

$2.30 last year $2.39 this year and that the whole story. Timing is wrong.........

Yukii,

I don't understand your reasoning on your statements! I think we all want to hear different opinions or angles that are not looked at but you seem to make suggestions without any thought process as to why.

We all appreciate a different view but please bring your reasonings with you.
I'm glad I did not take your first recomendation to sell because you thought the timing was all wrong.

Brad

Brad I said don't buy and it went down, consider yourself lucky it went back up but I would not expect this to hit $62.

QuoteI thought you knew already. I didn't like the stock when David picked it at $26.36, it then went to $23.85. I think its at full value at $28 right now as I stated before in the thread. Just my opinion I could be wrong. Stochastic turning Neg..  A black candle tomorrow would confirm it. But I guess if you are holding for 3 years none of this matters. I only think short term. I think 8% profit or 13% if you bought it on the dip is pretty good for JAKK short term. I don't think you will get much more with there numbers.

"Stochastic turning negative ... a black candle would confirm it ... I only think short term". And you claim to have 40 years of experience. I think you have 40 years of doing the same thing, which is different.

Please don't take this personally. I can't imagine how hard it would be for me to spend 40 years thinking and making something and then find out that I was wrong. I've done things for 5 years or more to then see that it was a complete waste of time. It was devastating, letting go of all my ideas and concepts, admitting I was dead wrong for so long. But it was also liberating.

But I guess 40 years is just too much time. The issue becomes a part of ourselves, of our ego and identity. Without that mind frame, we're nothing. For example, my wife's grandparent has been a communist all his life. He's 80 years old now. I know he knows now that he was wrong, but you'll never hear him saying that. He will defend communism until he dies, and nothing or no one will ever change his ideas. He's "the communist".

I've read a good book on this subject, which is Practicing the Power of Now, from Eckhart Tolle. I've learned not to have an ego.

This conversation has nothing to do with JAKK, of course. I'm going to tell Ramsburg to speed up the process of you having your own portfolio here at 3 Stocks so that you have something to be entertained and let go of my picks. Anyway, I value your inputs and sometimes they help me.

Not in JAKK's case. The stock is just 3.16% shy of a new all time high, and fundamentals fully deserve a much higher share price. I'll keep holding JAKK.

Quote from: David Randolph on June 22, 2007, 06:52:26 AM

QuoteI thought you knew already. I didn't like the stock when David picked it at $26.36, it then went to $23.85. I think its at full value at $28 right now as I stated before in the thread. Just my opinion I could be wrong. Stochastic turning Neg..  A black candle tomorrow would confirm it. But I guess if you are holding for 3 years none of this matters. I only think short term. I think 8% profit or 13% if you bought it on the dip is pretty good for JAKK short term. I don't think you will get much more with there numbers.

"Stochastic turning negative ... a black candle would confirm it ... I only think short term". And you claim to have 40 years of experience. I think you have 40 years of doing the same thing, which is different.

Please don't take this personally. I can't imagine how hard it would be for me to spend 40 years thinking and making something and then find out that I was wrong. I've done things for 5 years or more to then see that it was a complete waste of time. It was devastating, letting go of all my ideas and concepts, admitting I was dead wrong for so long. But it was also liberating.

But I guess 40 years is just too much time. The issue becomes a part of ourselves, of our ego and identity. Without that mind frame, we're nothing. For example, my wife's grandparent has been a communist all his life. He's 80 years old now. I know he knows now that he was wrong, but you'll never hear him saying that. He will defend communism until he dies, and nothing or no one will ever change his ideas. He's "the communist".

I've read a good book on this subject, which is Practicing the Power of Now, from Eckhart Tolle. I've learned not to have an ego.

This conversation has nothing to do with JAKK, of course. I'm going to tell Ramsburg to speed up the process of you having your own portfolio here at 3 Stocks so that you have something to be entertained and let go of my picks. Anyway, I value your inputs and sometimes they help me.

Not in JAKK's case. The stock is just 3.16% shy of a new all time high, and fundamentals fully deserve a much higher share price. I'll keep holding JAKK.

Not sure what you are trying to say, I simple thought its a good time to sell. The chart says it all
http://stockcharts.com/h-sc/ui?s=JAKK&p=DAILY&b=5&g=0&id=p44611275906 (http://stockcharts.com/h-sc/ui?s=JAKK&p=DAILY&b=5&g=0&id=p44611275906)

QuoteNot sure what you are trying to say, I simple thought its a good time to sell. The chart says it all
http://stockcharts.com/h-sc/ui?s=JAKK&p=DAILY&b=5&g=0&id=p44611275906

It's funny how when I try to make a point the stock contradicts me the next day. Probably I shouldn't try making points ;D

What JAKK needs now is some international expansion, as the company still only sells 12% internationally. A few days ago I went to ToysrUs here in Portugal and found some JAKK products, which I believe weren't there in the past. They had those wrestling action figures for sale. I don't think they will sell very well here, because people are not very familiar with wrestling, it isn't a part of our culture.

What they should sell, instead, was their Plug it in and Play TV games. Those would sell out pretty quickly. I'm sure the company knows this fairly well, but, anyway, I'm going to write an e-mail with the suggestion.

As I read the latest earnings presentation, I get a slight detail that may mean a lot for the future of the stock price:

"We are reaffirming our previously issued 2007 guidance of at least $800 million in net sales and net income of $75.8 million, or $2.39 per diluted share."

I'll keep holding JAKK.

JAKK is trading at 11 times earnings and I believe it will positively surprise the market going forward, regardless of how the general economy does. Technically the stock almost touched its ascending trendline support, currently at $27.13.

I'll continue holding JAKK.

JAKK reacted well to the ascending trendline support. I think it is just a matter of time before it pushes up to a new all time high (the current all time high is $29.33).

Volume picked up considerably on JAKK today, I wonder why. It was the highest volume in roughly two months. The stock was down a bit on the day, closing right at short term technical support.

Whatever happens to the technical picture, I'm very confident we'll see new all time highs sooner rather than later for JAKK.

fyi

JAKK: Short Interest UP 10.6% to 3.8M in Jun 2007
Tuesday , June 26, 2007 16:34ET

According to new short interest data from NASDAQ, short interest for JAKKS Pacific Inc (NasdaqNM: JAKK) INCREASED 10.6% to 3,839,383 shares for the month ended mid-June, 2007.

SYMBOL    MAY            JUNE          CHANGE       %CHANGE  DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
JAKK    3,470,903       3,839,383        +368,480       +10.62%          11

Based on JAKK's 20-day average daily share volume of 356,400, it would require approximately 11 day(s) of buying to cover this short interest.

Thanks La-Onda, that is a relevant short position. I expect the stock to breakout to a new all time high and all those bears will have to compete to buy to cover, further moving the stock up.

JAKK closed just 1.7% shy of a new all time high, which was set on October 26, 1999 at $29.33.

The company's internal guidance for 2007 EPS is "at least $2.39", so JAKK is still trading at 12 times earnings, compared to 24.77 for the Toys & Games industry average (http://finance.yahoo.com/q/co?s=JAKK).

I'm very confident that JAKK is about to explode on the upside, due to the fact that it is undervalued, and because shorts will need to cover all the way up as the stock enters a new high territory. Maybe next week, but I'll keep holding JAKK for the long term.

Despite my strong believe that JAKK is undervalued and set to breakout to a new all time high above $29.33, of course a lot of people see it the opposite way, and feel we're near the highs. The $29 area is a very strong resistance level, so probably it will take time to digest and surpass.

However, every time the stock goes down bulls show up to buy. This bull/bear fight will go on until one of the groups wins and the stock decisively goes in one direction. I think the bulls will win the short term fight, but even if they don't, I'll keep on holding because it is about time for me to trust my convictions and analysis and not listen to the short term waves of the market, which are meaningless for the medium term future of the stock price.

JAKK couldn't make a move towards new all time highs above $29.33, but bears also couldn't close it back below the $28.5 support level. So the stock is stuck in this very tight range.

Fundamentals are as attractive as they can be, considering the risk, which is quite low in my opinion. This company is a very diversified maker of cheap toys. There will always be demand for the company's products. Revenue in 2007 will be "at least $800 M" and EPS will be "at least $2.39".

I'm also a big fan of the company's Plug it in and Play TV games. I think they're going to be a huge hit in Europe (also in the US, I believe they're selling very well).

Another issue I love about JAKK is the stability of the net profit margin (between 9 and 10%), which is indicative of very skilled management. 

If I had to put all my money in one stock of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php) that stock would be JAKK.

JAKK is getting ready to make the trip to unknown territory, that is, new all time high land. Possibly this week. I'll keep holding JAKK.

JAKK continues to warm up for a beautiful white marubozu with volume above average that will put it in all time high territory for every mortal to see.

Trading at 12 times very solid and consistent earnings makes JAKK one of the cheapest and most attractive $500 M market cap plus stock out there in the market.

I firmly believe the company will beat its $2.39 EPS guidance for 2007. Man, if they start selling those Plug it in & Play TV games (http://www.jakkstvgames.com/) in Europe, I'm sure revenues and profits will skyrocket. They're so cool 8)

I should give my son some JAKK's shares in Christmas. I'm sure he wouldn't appreciate them now, but 10 years into the future, he'll love the present :)

JAKK closed just 0.54% shy of an all time high. But it already closed at a seven year high. I'll just let the profits run.

JAKK finally closed at a new all time high. Discussion time is over now, it's time for the bears to recognize they were wrong and buy the stock. Or else watch it rise on the sidelines.

After being losing more than 12% on JAKK I'm now winning 15% and I'll keep on holding, because the best is yet to come.

Now that JAKK is comfortably at a new all time high, I need to focus on my valuation model, to see if the estimates are reasonable or not:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=38945;image)

Let's focus on that 17% revenue CAGR estimate. Revenues in 2006 were $765.4 M, so, to be in line with the long term estimate, they should be $895.5 M in 2007. So far the company's guidance is "at least $800 M", so it needs to beat guidance by a wide margin to stay in line.

I happen to believe this will be the case.

I'll continue holding JAKK.

JAKK was one of the few green spots of the Main Portfolio yesterday, rising 1% with volume above average of 1.265 million shares.

It seems 2nd quarter earnings will be out tomorrow:

TABLE: Unconfirmed Earnings Expected Wednesday, Jul 18 (http://www.knobias.com/story.htm?eid=3.1.bda0f447d23e22318fb49e0feecfdef6079fc6c66220176213d43d25904068ad)

Expectations are the following:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=39010;image)

I expect JAKK to beat estimates, like it did over the past three quarters.

I'll continue holding JAKK.

Quote from: David Randolph on July 17, 2007, 06:55:19 AM

I expect JAKK to beat estimates, like it did over the past three quarters.

I'll continue holding JAKK.

Let's see what the market respons was the day before and after earnings:
                           
     Nov 8   Nov 9   Nov 10          Feb 23  Feb 26 Feb 27        Apr 25  Apr 26  Apr 27
           06       06        06                 07         07        07*            07        07         07
Open  22,17   22,30   21,76          21,04   24,73   24,38         25,01   25,99   26,55
High   22,34   22,30   22,17      21,54   25,96   24,84      25,98   26,81   26,55
Low   21,86   21,57   21,76      20,87   24,18   24,05      24,71   24,97   24,56
close   22,30   21,70   22,09      21,53   25,24   24,16      25,56   26,60   24,95
            Nov 13 th back up               Feb 28th back up                 May 1st back up

* Complete market correction

If the past is any indication of the past one should sell on the day of earning, buy back day after and enjoy the ride up again after that...

That's what I'll do. And if my track record is any indication everybody else should indeed hold b/c it seems that when I do that the past is no indication of the past  :P :P

Amarens

QuoteIf the past is any indication of the past one should sell on the day of earning, buy back day after and enjoy the ride up again after that...

That's what I'll do. And if my track record is any indication everybody else should indeed hold b/c it seems that when I do that the past is no indication of the past  :P :P

Amarens

Lol, good luck Amarens :)

I try to ignore short term fluctuations and try to focus on the main direction. Earnings will be out before tomorrow's open, so I'll update this analysis when we have the numbers.

QuoteI try to ignore short term fluctuations and try to focus on the main direction. Earnings will be out before tomorrow's open, so I'll update this analysis when we have the numbers.

No, earnings were not out, nothing happened. I thought they would be released today because of "historical evidence" given by Knobias:

TABLE: Unconfirmed Earnings Expected Wednesday, Jul 18 (http://www.knobias.com/story.htm?eid=3.1.bf4219cc72a80e733b57ae00d78a1ccd5d22ca9ef893285f50e4333413f2ad3b)

The stock fell a bit today on profit taking, I'll keep holding JAKK.

JAKK will announce earnings next Wednesday:

• JAKKS Pacific to Announce Results for Second Quarter 2007 (http://biz.yahoo.com/bw/070719/20070719006032.html?.v=1)
Business Wire (Thu 5:00pm)

I believe the company will post better than expected results, as it did over the past three quarters:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=39115;image)

For some reason the stock is near an all time high.

JAKK is going through a consolidation period, after the nice bull run it had to new all time highs. I expect results on Wednesday (http://biz.yahoo.com/bw/070719/20070719006032.html?.v=1) to positively surprise investors.

JAKK continues to go through a consolidation period, but I expect earnings to positively surprise investors when they're released next Wednesday.

Today when I went to the local supermarket I saw a couple of kids buying JAKK's WWE action figures, and they were very excited about them ... later, at dinner, I saw on TV that those toys were being advertised with bolycaos, a chocolate bread all kids here in Portugal eat (don't know about the rest of Europe).

JAKK had just 12% of revenue coming from Europe, but I believe that's going to expand a lot in the future. No doubts I'll keep holding JAKK.

Quote from: David Randolph on July 23, 2007, 06:27:01 PM
JAKK continues to go through a consolidation period, but I expect earnings to positively surprise investors when they're released next Wednesday.

Hi David,

I understood release is tomorrow.

July 19, 2007 - 4:01 PM EST     
JAKKS Pacific to Announce Results for Second Quarter 2007

JAKKS Pacific, Inc. (Nasdaq:JAKK) will announce 2007 second quarter and first six months results on Wednesday, July 25, 2007 before the stock market opens. The Company will also hold a teleconference and webcast to discuss these results and may discuss future plans and prospects.

Anyone interested will be able to listen to the teleconference, scheduled to begin at 10:30 a.m. ET (7:30 a.m. PT) on July 25th, via the Internet at www.jakkspacific.com, www.CompanyBoardroom.com, or www.StreetEvents.com. These websites will host an archive of the teleconference for 30 days.

A telephonic playback will be available from 11:45 a.m. ET on July 25th through 12:00 a.m. ET on August 25th. The playback can be accessed by calling 800-642-1687, or 706-645-9291 for international callers, pass code "1256686."

Arghhh, below expectations:

• JAKKS Pacific Reports 2007 Second Quarter and First Six Month Results (http://biz.yahoo.com/bw/070725/20070725005337.html?.v=1)
Business Wire (Wed 5:55am)

Reiterates guidance of $800 M in revenues and $2.39 EPS for full year 2007. This quarter isn't very important, because, as for most retailers, the 4th quarter has most of the sales.

But it's a pity because I was counting on JAKK to provide a nice boost to the Main Portfolio, but it looks like it will be more of a drag today ::)

I'll continue holding anyway, because the stock is trading at 12.5 times earnings and the industry average trades at 25 times earnings (http://finance.yahoo.com/q/co?s=JAKK) and I don't think the discount is warranted. I see today's probable sell off as a long term buying opportunity.

Perhaps we should acknowledge the rule of not holding through the earnings of any company. The setbacks are huge and painful. There is no reason to count the examples. The reward may be good if earnings are good, but it is better to have no gain than a large loss, no? However, it is tempting to hold through earnings...  :)

QuotePerhaps we should acknowledge the rule of not holding through the earnings of any company. The setbacks are huge and painful. There is no reason to count the examples. The reward may be good if earnings are good, but it is better to have no gain than a large loss, no?

The problem of not holding through earnings is that one needs to be a short term trader to do that, not an investor. One has to decide to never hold a stock for more than 3 months.

That's not a good idea in my view.

I guess one needs to realize the stock market is a risky game and there will always be setbacks, as there are no perfect strategies. If the winners win more than the losers lose, one comes out ahead over the long term.

It's very hard to defend a stock that is going down 17% on the day :P ... curiously the chart was wrong too, since it was clearly pointing to a positive earnings surprise, as the stock was trading near all time highs and went up yesterday, even as the general market went down 2% plus.

Maybe one of the stocks that broke down technically, take GIGM as an example, will rise 20% on its earnings day, to compensate for JAKK's miss ... since the chart doesn't know anything.

Motley Fool came out with an article that explains fairly well why JAKK is a bargain at current prices:

Wan-Eyed JAKKS (http://www.fool.com/investing/general/2007/07/25/wan-eyed-jakks.aspx)

My take is the 2nd quarter isn't all that important, since the second half of the year (especially the 4th quarter) has most of the sales and profits of the company. A weaker or stronger second quarter doesn't mean much about the company.

It seems to me the market overreacted to the news because in 2006 JAKK also had a very optimistic guidance and then failed to deliver. But that's not the case this year, since EPS guidance for 2007 is just 9 cents higher than the 2006 EPS of $2.3.

I think management is being fairly conservative and will be able to beat their own guidance when the year is finally over. This quarter is meaningless for that outcome in my view.

I'll keep on holding JAKK.

JAKK touched its 200 days SMA support and bounced a bit. I don't think it falls any further, in fact, I'm pretty much certain that, given the fundamentals, the stock will close the year comfortably above $30. We'll just need to have a looooootttt of patience.

There were some news out yesterday:

• JAKKS Pacific(R) Signs Licensing Agreement for Wow! Wow! Wubbzy! (http://biz.yahoo.com/bw/070726/20070726005338.html?.v=1)
Business Wire (Thu 6:00am)

It seems to me the market overreacted to the news because in 2006 JAKK also had a very optimistic guidance and then failed to deliver. But that's not the case this year, since EPS guidance for 2007 is just 9 cents higher than the 2006 EPS of $2.3.

I think management is being fairly conservative and will be able to beat their own guidance when the year is finally over. This quarter is meaningless for that outcome in my view.

I'll keep on holding JAKK.
[/quote]

David, do you still think they can deliver this time given the margin pressure (35% gross margin compared to 39.7% in previous year) and the earnings shortfall? I really doubt it.  I considered the report very ugly and shorted it accordingly. My opinion is sell.

QuoteDavid, do you still think they can deliver this time given the margin pressure (35% gross margin compared to 39.7% in previous year) and the earnings shortfall? I really doubt it.  I considered the report very ugly and shorted it accordingly. My opinion is sell.

Hi BigSully1, congrats on your trade :)

Well, if you consider that in the first six months of 2006 JAKK made $0.31 profit per share and in the first 6 months of 2007 it made $0.30 per share, I don't see why not delivering $2.39 in 2007 versus $2.30 in 2006.

It's clear that the first half doesn't mean much for the full year revenues or profits. I maintain that the market is overreacting to the news of a weaker than expected quarter, a quarter that doesn't have much relevancy for the full year, therefore I see JAKK's current sell off as a long term buying opportunity, not a selling opportunity.

Anyway, it makes me sick to see it down this much so quickly, since it took months to go up over $30 ... it makes me sick, but it's reality, congrats to the short term swing traders.

I'll continue holding JAKK.

JAKK just promoted on CNBC by a guy whose name was Al Frank (I think).  He said its only trading at a PE of 10, they reaffirmed guidance, and that JAKK had its own little bear market since earnings, so is a good buy.

Quote from: tokyopua on July 30, 2007, 10:24:46 AM
JAKK just promoted on CNBC by a guy whose name was Al Frank (I think).  He said its only trading at a PE of 10, they reaffirmed guidance, and that JAKK had its own little bear market since earnings, so is a good buy.

Thanks for the information Tokyopua :)

I've heard JAKK's conference call and management expects a very strong 2nd half of the year, with several new product lines hitting the shelves. They're particularly excited about Hanna Montana's doll.

I don't understand why a company with JAKK's potential is trading at just 10 times earnings ... I guess it is just cheap!

BigSully1 says "sell" because he thinks the company won't deliver on its promises and will and earn less than the expected $2.39 per diluted share. I would say that's the market expectation too. The company just has to deliver on its promises for the market to be positively surprised ... I believe that's what's going to happen.

I'll keep holding JAKK.

People will never stop buying toys for their kids, and JAKK is an exciting toy maker.

However, the company is heavily dependent on WWE action figures and there's some litigation with WWE in courts. Perhaps that's the explanation to why it trades at just 10 times earnings.

But, just Hanna Montana and Cheetah girls dolls may eclipse WWE action figures in the second half. We'll just have to see about that, but I'm confident JAKK will close 2007 comfortably above $30.

JAKK finally showed some signs of life, after the awful sell off it had due to weaker than expected second quarter earnings. I maintain that the second quarter is almost meaningless for the full year results of this company and I expect JAKK to meet or exceed its EPS guidance of $2.39 for 2007.

Nothing new for JAKK yesterday, the stock is trading at 10 times earnings and it shouldn't. I enjoy many of the company's products, like for example, the Plug it in & Play TV games. I wish they start selling in Europe too.

I'll keep holding JAKK.

JAKK has been behaving terribly since 2nd quarter earnings came out, but I maintain that the quarter isn't all that relevant for the full year EPS number. I also believe JAKK's business will resist a potential economic recession in the US better than most businesses, because if there's one thing parents don't save is on cheap toys for their children.

The stock almost closed a gap that was opened at $21.54, but then it claw back up and closed down just 0.22%, on volume above average. I expect the stock to at least not fall much more from the current price, and to move higher when more earnings are released.

I'll hold JAKK. 

JAKK continues to head lower, on no new fundamental information. The market thinks 2007 will be like 2006, when the company had lower than expected revenues and EPS, and certainly the 2nd quarter numbers made such view more valid.

But I still think the second quarter isn't meaningful for the full year. The worst case scenario is priced in now (perhaps technically the stock will still close the gap at $21.45 before pushing higher again), so if the company posts just "in-line" numbers it will surely move back above $30.

I think this is going to be the case and I'll hold JAKK.

JAKK has been doing terribly and it has been extremely difficult to remain focused on the long term these days. I could have sold because of the "weaker than expected" quarter at $27 or so, but instead I wanted to look beyond the short term and got killed by the market.

That damn gap was closed, but I wonder if we won't go down to close another one that is opened at $18.39 now :P

I wasn't expecting buying a toy maker trading at 10 times earnings and then see its shares fall about 40% in a couple of weeks ... but I guess that if the company just meets expectations it will also gap up strongly and recover the lost ground. JAKK has been in a range between $10 and $30 for almost 10 years now, and during that time revenues grew 19 fold and EPS grew 7 fold, it doesn't make any sense.

I'll hold JAKK for the long term.

David,
don't get discouraged on this one. its true I don't own it right now but I am definately going to be selling my CL for it and getting back in JAKK.
according to the Dow Theory Quadrix by ticker this is how JAKK scores.

JAKK
overall score         92 (they only recomend stocks with a score over 80)
momemtum         74
value                    95
quality                   72
financial strength   79
earnings estimate  21
performance         74
volume metrics     55

Quote from: pinoleropuro on August 09, 2007, 07:04:18 AM
David,
don't get discouraged on this one. its true I don't own it right now but I am definately going to be selling my CL for it and getting back in JAKK.
according to the Dow Theory Quadrix by ticker this is how JAKK scores.

JAKK
overall score         92 (they only recomend stocks with a score over 80)
momemtum         74
value                    95
quality                   72
financial strength   79
earnings estimate  21
performance         74
volume metrics     55

Thanks for your view on JAKK pinoleropuro. I think JAKK is falling mostly for technical reasons and the stock already had its own bear market, and it is trading at just 8 times earnings now. I like the business on a long term perspective and I'll keep holding JAKK for the long term.

The 10-Q form filed yesterday shows a clean business which is growing just 5% a year, but I think the slow growth is what's priced in now. And business will probably accelerate in the second half.

JAKK went down ferociously to close the gap at $18.39, and rebounded with a vengeance to close at $21.39, with volume above average of 1.6 million shares.

It seems like JAKK doesn't like to leave gaps open ... now, after the latest non-sense move (I know BigSully doesn't agree, but I disagree with him), JAKK should immediately recover and close another gap, at $29.50.

I say the decline phase marked with 1 on the first chart below was a non-sense because it was based on a 8 cents earnings miss, when the full year number is something between $2.30 and $2.50 (the company's guidance is $2.39).

If we take out these 8 cents to the $2.39 guidance, we get $2.31, that is, 3.3% less. And, because of this slight miss, the stock price fell 39% ::) Ridiculous if you ask me. Especially if we think that the 1st half is the weakest from a seasonal standpoint and that most of the company's investments for this season will only hit stores in Q3, like Hanna Montana and the Cheetah Girls, for example.

The company may very well meet or beat its 2007 guidance of $800 M in revenue and $2.39 EPS, since management said it is very comfortable with its full year guidance.

I'll keep holding JAKK for the long term.

Quote from: David Randolph on August 12, 2007, 04:44:25 PM
JAKK went down ferociously to close the gap at $18.39, and rebounded with a vengeance to close at $21.39, with volume above average of 1.6 million shares.

It seems like JAKK doesn't like to leave gaps open ... now, after the latest non-sense move (I know BigSully doesn't agree, but I disagree with him), JAKK should immediately recover and close another gap, at $29.50.

I say the decline phase marked with 1 on the first chart below was a non-sense because it was based on a 8 cents earnings miss, when the full year number is something between $2.30 and $2.50 (the company's guidance is $2.39).

If we take out these 8 cents to the $2.39 guidance, we get $2.31, that is, 3.3% less. And, because of this slight miss, the stock price fell 39% ::) Ridiculous if you ask me. Especially if we think that the 1st half is the weakest from a seasonal standpoint and that most of the company's investments for this season will only hit stores in Q3, like Hanna Montana and the Cheetah Girls, for example.

The company may very well meet or beat its 2007 guidance of $800 M in revenue and $2.39 EPS, since management said it is very comfortable with its full year guidance.

I'll keep holding JAKK for the long term.

David, I don't necessarily disagree with you that JAKK might be a good value where it's at now. I chose not to buy for reasons previously given. When the ER came out, It seemed an absolute no-brainer to me to immediately short it as the current market is very unforgiving on those that miss, or even those that don't beat by enough.

It did  look like capitulation and if I had been paying attention to JAKK Friday, I should have covered immediately on the gap fill, my mistake. I still have plenty of room on it though and will probably buy to cover on a bullish close above 21.54 or so, or if it drops back to around 19. I think you overly optimistic though to think it will immediately recover and close the gap at 29.50.

Good Luck with it and may we both win money on it, I'm not in a contest with you on it. I think JAKK and TZOO was probably the only of your picks (that I can remember) where I was very outspoken negatively. Probably you will be right on JAKK at some point down the road???

Hannah Montana(TM) and The Cheetah(TM) Girls Dolls Kick Off a Rockin' Holiday Season
Monday August 13, 6:00 am ET 
JAKKS Pacific(R) Launches New Product Line Inspired by Disney Channel Tween Sensations  

MALIBU, Calif., Aug. 13 /PRNewswire-FirstCall/-- Two of the hottest tween properties have made their way to the toy aisle, much to the delight of excited tween girls everywhere! JAKKS Pacific, Inc. (Nasdaq: JAKK - News) and Disney Consumer Products (NYSE: DIS - News) are introducing new role play lines based on the two hit Disney Channel properties, Hannah Montana and The Cheetah Girls. Highly-detailed fashion dolls and stylish singing dolls from JAKKS' Play Along® division are the first items expected to hit retail shelves nationwide, with a full line of products following this fall, including detailed playsets, stylish role-play and dress-up items from JAKKS' CDI(TM) division, and deluxe interactive video games from JAKKS' Plug It In and Play TV Games(TM) line.

"After months of pent up demand for the Hannah Montana and Cheetah Girls products, we're thrilled to finally put them into consumers' hands," said Charlie Emby, Co-President, Play Along. "We are anticipating strong momentum through the holiday season."

With a recent Emmy® nomination for Outstanding Children's Programming, two soundtracks in the same year to debut at No.1 on the charts, and record-breaking ratings for a cable show, Hannah Montana has become a phenomenon among the tween and pre-tween audience. Since its debut as the highest rated premiere in Disney Channel history, the show has continued to win over fans with a mix of playful antics, fresh fashions and phenomenal music. The storyline revolves around a young girl named Miley Stewart who leads a secret life as pop star Hannah Montana. Fans relate to the girl-next-door character while aspiring to be like the glamorous superstar. In addition to the TV show, girls can also catch the pop star live in concert -- she's touring again this fall to 55 stadium-sized venues.

Playing up the fashion and music themes inherent to the TV series, the Hannah Montana role play line includes everything a girl could want to pretend to "rock out the show", just like Hannah Montana. Available online and at all major retailers, the new product line includes Fashion Collection Dolls, In Concert Collection (singing) Dolls, the Rockin' Electric Guitar, the Rock Star Acoustic Guitar, the Rock Star Dance Mat and two playsets: the Backstage Closet and the In Concert Stage.

With two of Disney Channel's highest rated original movies, a third movie in the works, sold-out concert tours and an original soundtrack that sold over 2 million copies to date, The Cheetah Girls have serious grrrrowl power! Based on the music, fashions and accessories from The Cheetah Girls, the new products enable young fans to emulate and pretend they're performing with The Cheetah Girls. Available online and at all major retailers, the new product line includes Fashion Collection Dolls, In Concert Collection (singing) Dolls, the Cheetah Fabulous! Dress-up Set, the Rockin' Style Keyboard, the Groovin' Dance Mat and The Cheetah Girls Tour Bus playset -- all totally "cheetah-licious" like The Cheetah Girls themselves!

My 10 year old loves HM and the Cheetah girls, she watches HM as much as she is allowed.  She also has the Cheetah Girls CDs...

seems the market likes the news too.

With this news JAKK can hopefully prove its guidance will hold for the rest of the year, hence provide more confidence for the investors. After the short-term traders sell off, JAKK should get on the rails bound north.

Yesterday's press release ...

• Hannah Montana(TM) and The Cheetah(TM) Girls Dolls Kick Off a Rockin' Holiday Season (http://biz.yahoo.com/prnews/070813/lam065.html?.v=95)
PR Newswire (Mon 6:00am)

... comes right on the wheels of what I wrote in my previous update:

QuoteIf we take out these 8 cents to the $2.39 guidance, we get $2.31, that is, 3.3% less. And, because of this slight miss, the stock price fell 39% ::) Ridiculous, if you ask me. Especially if we think that the 1st half is the weakest from a seasonal standpoint and that most of the company's investments for this season will only hit stores in Q3, like Hanna Montana and the Cheetah Girls, for example.

The market responded quite strongly to the press release (there wasn't any real news in it), probably because of short covering and also because the stock is so cheap from a fundamental standpoint, trading at just 9.5 times earnings.

At one point the stock was up 17% on the day, but as the general market started going down, the rally fizzled a bit and JAKK closed up "just" 6.2%. When comparing yesterday's high of $25.34 with Friday's low of $18.19, we see the stock was up 39% in two days, from bottom to top and this tells us JAKK has been incredibly volatile.

Quote from: JKN on August 13, 2007, 10:33:17 AM
My 10 year old loves HM and the Cheetah girls, she watches HM as much as she is allowed.  She also has the Cheetah Girls CDs...

seems the market likes the news too.

Thanks for sharing this feedback on JAKK's products JKN. I think Hanna Montana, Cheetah Girls and Plug it In and Play TV games can be very important for JAKK, because they may diversify the company's revenues from the traditional WWE action figures, where there are litigation issues. I don't know enough about the US toy market, but I guess that these new dolls and related toys can sell even more than WWE action figures, because WWE is kind of old and the dolls are something new which can be very appealing.

We'll see, but management is confident they can meet their full year guidance of $2.39 EPS on $800 M revenue, and I'm also confident they'll be able to achieve their goals.

If management's expectations materializes the stock will inevitably push higher above $30 a share. If they beat the numbers the $35-$40 range will be within reach.

I'll continue holding JAKK for the long term.

JAKK published two positive press releases, but failed to inspire investors due to general market jitters:

• WWE(R) SmackDown(R) vs. Raw(R) 2007 Reaches Major Sales Milestone for the Xbox 360(TM) Video Game and Entertainment System from Microsoft, PlayStation(R)2 Computer Entertainment System and PSP(R) (PlayStation(R)Portable) System (http://biz.yahoo.com/bw/070814/20070814005551.html?.v=1)
Business Wire (Tue 6:00am)

• 2007 WSSA World Sport Stacking Championships on ESPN (http://biz.yahoo.com/prnews/070814/latu045.html?.v=101)
PR Newswire (Tue 6:00am)

The first press release made me make a brief investigation on THQ (symbol: THQI), which is a JAKK partner. THQI is a $1.88 B market cap company trading at 28 times earnings. JAKK is a $619 M market cap trading at 9 times earnings.

JAKK has it all to at meet or beat its full year guidance in 2007, and that will put the stock north of $30 in my view.

JAKK issued another press release about its business activities, not that anyone is reading:

• JAKKS Pacific(R) to Offer Toys & Activities Based on Preschool Property Max & Ruby (http://biz.yahoo.com/prnews/070815/law014.html?.v=101)
PR Newswire (Wed 6:00am)

JAKK is already trading at bear market multiples and I don't see any effect in its business from a possible recession in the US.

I'll keep on holding JAKK for the long term.

JAKK was the Main's best performer yesterday (it wasn't difficult :-\). I hope Hanna Montana, Cheetah Girls and Plug it in and Play TV games can contribute handsomely to JAKK's revenues in the second half, because that would certainly help investors expand the stock's earnings multiple.

This is because investors don't like the company's excessive dependency on WWE action figures, which are a matter of litigation (but that's just in Japan as we've seen, the undervaluation is unwarranted).

I've made a small value calculation of Jakk using the "Buffet" method.

I have been very conservative for the growth parameters (7% and 3%) and I've been severe on the amount of outstanding shares  (32m instead of 28m, mentioned in 10-K).

Results:

(http://users.pandora.be/freha/Jakk.jpg)

If you see some errors, or if you have any remarks, please tell them and I will adapt the model.

QuoteIf you see some errors, or if you have any remarks, please tell them and I will adapt the model.

Thanks for the very interesting analysis Fré. I think this is the DCF (Discounted Cash Flow) method, but considering the book I've read about Warren Buffet's methods (Buffetology), he doesn't use it, does he?

Anyway, I think whatever fundamental analysis angle we choose to pick, the conclusion is always the same: JAKK is undervalued and about to go higher.

Technical analysis was also bullish, but because of an 8 cents miss (of an overall $2.39 probable EPS for the year) the stock fell 40% in a couple of weeks and technical analysis is mixed now.

Probably it wasn't because of my e-mail, but JAKK started selling its Plug it in & Play TV games in Europe, I saw them for sale this weekend in Fnac stores here in Portugal. The only problem is they're selling the games at 34.99 euros each (approximately $47), while in the US they sell them for $19.90. How come the European price is 136% higher than the US price?

I'm going to e-mail the company on this issue.

Anyway, the games were spectacular. Even my wife wanted to buy "Pacman" for her to play. But I said "I'm going to order this from Amazon UK for less than half the price".

I'll keep holding JAKK for the long term.

Quote from: David Randolph on August 20, 2007, 07:49:28 AM

QuoteIf you see some errors, or if you have any remarks, please tell them and I will adapt the model.

Thanks for the very interesting analysis Fré. I think this is the DCF (Discounted Cash Flow) method, but considering the book I've read about Warren Buffet's methods (Buffetology), he doesn't use it, does he?

It's the DCF method allright, based on a book studying Buffets investment methods. It's the only book I've read on Warren Buffet so far, so I can't doudble check.
I can only say that it's about the same as mentioned on www.validea.com (which also covers the Buffet investment method).

Quote from: Fré on August 20, 2007, 12:51:31 PM

Quote from: David Randolph on August 20, 2007, 07:49:28 AM

QuoteIf you see some errors, or if you have any remarks, please tell them and I will adapt the model.

Thanks for the very interesting analysis Fré. I think this is the DCF (Discounted Cash Flow) method, but considering the book I've read about Warren Buffet's methods (Buffetology), he doesn't use it, does he?

It's the DCF method allright, based on a book studying Buffets investment methods. It's the only book I've read on Warren Buffet so far, so I can't doudble check.
I can only say that it's about the same as mentioned on www.validea.com (which also covers the Buffet investment method).

What's the name of your book Fré? I would like to buy it, thanks :)

I've just sent an e-mail to JAKK's Consumer Relations asking why is it that the retail price in Portugal for the Plug it in & Play TV games is 135% higher than in the US.

JAKK rose 0.92% yesterday, nice. I think the worst case scenario is priced in and the company just needs to meet or not miss by much on its full year guidance for the stock to push higher above $30.

Quote from: David Randolph on August 21, 2007, 06:49:38 AM

Quote from: Fré on August 20, 2007, 12:51:31 PM

Quote from: David Randolph on August 20, 2007, 07:49:28 AM

QuoteIf you see some errors, or if you have any remarks, please tell them and I will adapt the model.

Thanks for the very interesting analysis Fré. I think this is the DCF (Discounted Cash Flow) method, but considering the book I've read about Warren Buffet's methods (Buffetology), he doesn't use it, does he?

It's the DCF method allright, based on a book studying Buffets investment methods. It's the only book I've read on Warren Buffet so far, so I can't doudble check.
I can only say that it's about the same as mentioned on www.validea.com (which also covers the Buffet investment method).

What's the name of your book Fré? I would like to buy it, thanks :)

I've just sent an e-mail to JAKK's Consumer Relations asking why is it that the retail price in Portugal for the Plug it in & Play TV games is 135% higher than in the US.

JAKK rose 0.92% yesterday, nice. I think the worst case scenario is priced in and the company just needs to meet or not miss by much on its full year guidance for the stock to push higher above $30.

It's from the author of the following website: http://www.smartcapital.be/. It is however in Dutch, so I don't think it'll help you a lot.

I'll take a closer look on Jakk the next days and I'll probably take a position.

QuoteIt's from the author of the following website: http://www.smartcapital.be/. It is however in Dutch, so I don't think it'll help you a lot.

Unfortunately I don't know Dutch, but thanks anyway Fré :)

QuoteI'll take a closer look on Jakk the next days and I'll probably take a position.

I hope you do. I've been very confident in JAKK since the first day I bought the stock, but unfortunately a weaker than expected Q2 took it down extremely hard and fast. But I remain confident that in the end JAKK will be a great long term investment.

JAKK's management puts a lot of faith in Hannah Montana's dolls and related products for the second half of 2007. It seems they're already available at ToysRus, has anybody seen them?

Here's a brief article about the launch, and considering the reviews from the 5-8 year old fans, I guess it's going to be a huge success: Hannah Montana Dolls For Release This Summer (http://www.buddytv.com/articles/hannah-montana/hannah-montana-dolls-for-relea-7107.aspx)

JAKK may even surprise everybody and post a higher than $2.39 EPS for the full year. Nobody really knows, but the market is pricing in the worst case scenario of a weak 2nd half ahead. I don't think that's going to be the case.

I'll continue holding JAKK.

David,

I dont know about the dolls specifically but i have 2 girls under 10 and I can tell you that they and all of their friens are obsessed with all things Hannah Montana.

jim

I still have my doubts about investing in JAKK:

-It's cristal clear that the co. is undervalued when you it compare to Marvell and Hasbro; and I don't see a reason for that.

-New exciting products are being released in the 2nd half of '07 which should give a boost to the company's revenues and earnings. The question however will be if that's enough to get $2.39 (or more).

-Margins stay at around 9% which is nice.


*On the other hand: 4% (earnings) growth isn't very much (for 07 and 08).

* The undervaluation has been here for 5 years and there are no signs that it will disappear.

* Risk/Reward is ok, but with the current market I'll try to find other bargains.


Conclusion: JAKK remains an interesting cash machine with upside potential, but it's also very sensitive. I'll monitor the stock very closely and I'll try to get in at $20-21.
Untill then, I'll be looking for other promising stocks.

Quote from: jdmark23 on August 22, 2007, 10:48:18 AM
David,

I dont know about the dolls specifically but i have 2 girls under 10 and I can tell you that they and all of their friens are obsessed with all things Hannah Montana.

jim

Thanks for your testimonial Jim :)

In the CEO's words, nobody knows the market potential of Hannah Montana related products, "but it can be HUGE". We'll see how things go in the 2nd half.

If indeed it is huge, it will have two effects on JAKK's valuation. First, the stock will rise because the company will meet or exceed its 2007 full year guidance and the market is now pricing in a disappointment. Second, the earnings multiple will expand from the current 10, because the company found a new revenue stream that will reduce WWE's exposure, which is what dents the valuation of the stock.

Quote-It's cristal clear that the co. is undervalued when you it compare to Marvell and Hasbro; and I don't see a reason for that.

It is because of the litigation between JAKK and WWE. The market anticipates that in 2009 the collaboration between the two companies will end, taking out the most important revenue stream for JAKK. But I don't think that's going to be the case, because WWE and JAKK relationship goes back more than 20 years and the litigation is about a minor issue in certain Asian countries, an area that provides less than 2% of revenue for JAKK. JAKK's CEO actually designed the very first WWE action figure. Moreover, it is possible that other products will reduce WWE's importance in JAKK's revenues and profits.

Quote*On the other hand: 4% (earnings) growth isn't very much (for 07 and 08).

Nobody knows how much earnings growth will be in 2007 and 2008. Expectations are low, but I think the company will beat those expectations.

Quote* The undervaluation has been here for 5 years and there are no signs that it will disappear.

There are signs, let's see if they materialize.

Quote* Risk/Reward is ok, but with the current market I'll try to find other bargains.

That's OK, good luck :) (and let me know what you find)

QuoteConclusion: JAKK remains an interesting cash machine with upside potential, but it's also very sensitive. I'll monitor the stock very closely and I'll try to get in at $20-21.

$20-$21 is possible, if the stock decides to make a double bottom or something like that.

Thanks for your comments jdmark23 and Fré :) I'll keep holding JAKK for the long term.

Until there are more earnings news investors will probably have "JAKK missed the quarterly estimates" on their heads and nothing will make it approach $30. Anyway, I'm confident the 2nd half will be at least as good as expected by the company's management, and that will be enough to put it at $30. If the numbers turn out being better than expected, the $35-$40 range will be within reach.

I love the company's products, especially Hannah Montana and Plug it in & Play TV games, which I think will be a huge success this Christmas. I'll patiently keep holding JAKK.

Here's a quick update for JAKK:
JAKK's recent sell off was unusual from a technical perspective, so personally and considering this stock was deeply penalized I expect the pullback move to be also uncommon... There are not much to tell from the chart, volume was very high during the lows, which is a characteristic of selling climax, the recent low volume should have bullish interpretation suggesting the lack of sellers on this stock, volatility should remain high but in general for the upside.

Portfolio Instructions:
Hold JAKK

Best regards,

Chart Update:
JAKK started the session very well and crossing above the ema-200, but the general market behavior was not helping, and JAKK closed far from the intraday highs, but still in positive territory which was good inside this context. Volume was higher suggesting an attempt to break this consolidation zone.

Portfolio Instructions:
Hold JAKK

Regards,

Rich Smith from Motley Fool published this article about Mattel after the close:
http://www.fool.com/investing/value/2007/08/28/mattel-finds-its-wallet-in-el-segundo.aspx
With this paragraph mentioning JAKK:

Quote(...) I don't mean to rain on Barbie's tea party here, but I just don't see the logic behind a buyback at today's prices. Mattel is priced a bit higher than its peers, with the exception of Hasbro. Personally, I'd be much more inclined to invest in either of the two smaller toymakers -- RC2 or, even better, the as-yet untainted-by-China JAKKS, than in Mattel (...)

Chart update:
A considerable fall today in response to the general market and once again showing the EMA-200 is an active resistance.

Portfolio Instructions:
Hold JAKK

Regards,

Chart update:
The chart is not looking so good right now, but we still can't draw an effective technical layout for the short term. In any case, I don't see much downside potential at this point, and I expect another attempt to break the EMA-200 anytime soon.

Portfolio Instructions:
Hold JAKK

Regards,

Thanks for these technical updates on my absence Ramsburg :)

JAKK is a bit below where it was when I left for a one week vacations period. There weren't any news out.

I think my latest update still says it all about JAKK:

Quote from: David Randolph on August 24, 2007, 05:29:56 AM
Until there are more earnings news investors will probably have "JAKK missed the quarterly estimates" on their heads and nothing will make it approach $30. Anyway, I'm confident the 2nd half will be at least as good as expected by the company's management, and that will be enough to put it at $30. If the numbers turn out being better than expected, the $35-$40 range will be within reach.

I love the company's products, especially Hannah Montana and Plug it in & Play TV games, which I think will be a huge success this Christmas. I'll patiently keep holding JAKK.

I'll patiently keep holding JAKK.

I hope these news on Mattel recall do not have a negative effect on JAKK...

Mattel Recalls 800,000 Lead-Tainted Toys
Wednesday September 5, 6:15 am ET
By Anne D'Innocenzio, AP Business Writer 
Mattel, the World's Largest Toy Maker, Recalls 800,000 More Toys Because of Lead Paint
NEW YORK (AP) -- Mattel Inc.'s reputation took another hit after the world's largest toy maker announced a third major recall of Chinese-made toys in little more than a month because of excessive amounts of lead paint.
ADVERTISEMENT


The latest action, which involved about 800,000 toys and which was announced late Tuesday, is yet another blow to Mattel. The news, along with other recent recalls of tainted Chinese toys from other toy makers, could also make parents even more nervous about shopping for toys this holiday season.

The latest Mattel recall, whose details were negotiated by the Consumer Product Safety Commission, covers 675,000 Barbie accessories sold between October 2006 and August of this year. No Barbie dolls were included in the action.

The recall also included 90,000 units of Mattel's GeoTrax locomotive line and about 8,900 Big Big World 6-in-1 Bongo Band toys, both from the company's Fisher-Price brand. The Big Big World products were sold nationwide from July through August of this year, while the GeoTrax toys were sold from September 2006 through August of this year.

Mattel's last recall, announced on Aug. 14, covered about 19 million toys worldwide. They included Chinese-made toys that either had excessive amounts of lead paint or had small magnets that could easily be swallowed by children.

On Aug. 1, Mattel's Fisher-Price division said it was recalling 1.5 million preschool toys featuring characters such as Dora the Explorer, Big Bird and Elmo because of lead paint. That action included 967,000 toys sold in the United States between May and August.

Robert Eckert, chairman and chief executive of El Segundo, Calif.-based Mattel, warned at a press conference last month that there may be more recalls of tainted toys as the company steps up its investigations into its Chinese factories and increases monitoring of production.

In a statement issued late Tuesday, Eckert said: "As a result of our ongoing investigation, we discovered additional affected products. Consequently, several subcontractors are no longer manufacturing Mattel toys. We apologize again to everyone affected and promise that we will continue to focus on ensuring the safety and quality of our toys."

Mattel added that it has completed its testing program for the majority of its toys and spent more than 50,000 hours investigating its vendors and testing its toys over the past four-week period.

Still, Mattel, which has cultivated an image of tightly controlling production in China, could face an uphill battle convincing consumers about the safety of its products this holiday season. The CPSC is also considering a possible investigation of whether Mattel notified authorities as quickly as it should have in connection with the Aug. 14 recall.

With more than 80 percent of toys sold worldwide made in China, toy sellers are also concerned shoppers will shy away from their products in this year's holiday season.

In June, toy maker RC2 Corp. voluntarily recalled 1.5 million wooden railroad toys and set parts from its Thomas & Friends Wooden Railway product line. The company said the surface paint on certain toys and parts made in China between January 2005 and April 2006 contains lead, affecting 26 components and 23 retailers.

In July, Hasbro Inc. recalled faulty Chinese-made Easy Bake ovens, marking the second time the iconic toy had been recalled this year.

A Chinese quality official said Wednesday that the country is investigating the latest recall.

Wang Xin, an official with the General Administration of Quality Supervision, Inspection, and Quarantine, said the agency, which oversees all products made in China, is trying to get details on when the toys were made and the manufacturers involved.

Mattel vowed as recently as last month it would tighten its controls at factories in China. About 65 percent of the company's toys are made in China, and about 50 percent of Mattel's production there is produced in company-owned plants.

The recalled toys in the Barbie accessory line included a Barbie Dream Puppy House, which had lead paint on the dog; a Barbie Dream Kitty Condo playset, which had lead paint on the cat; and a Barbie table and chairs kitchen playset, which had lead paint on the dog and dinner plates.

Mattel said in a statement that the Barbie products affected by the recall were produced by Holder Plastic Company, a Mattel contract vendor, which subcontracted the painting of miniature toy pets and small furniture pieces to Dong Lian Fa and Yip Sing. Both companies used uncertified paint and are no longer producing toys for Mattel, the company said.

Mattel added that its probe revealed that the subcontractors painted the affected toys between March 2007 and August 2007. However, Mattel said it's being cautious in recalling the entire production of the seven toys painted by the subcontractors, and toys made beginning in October 2006 are included within the recall.

Among the three Fisher-Price toys recalled are two GeoTrax toys and a toy from the Big Big World line.

The two GeoTrax toys were made by Apex Manufacturing Company Ltd., one of Mattel's contract vendors, which outsourced paint work to a subcontractor, Boyi Plastic Products Factory. Apex supplied Boyi with certified paint; however, the toys were made with uncertified paint. Boyi is no longer in business, Mattel said.

The GeoTrax toys were manufactured between July 31, 2006, and September 4, 2006; however, the painted parts were stored and incorporated into toy production throughout the year. Mattel said it is recalling toys shipped between August 3, 2006, and July 31 of this year.

Fisher-Price's Big Big World toy was manufactured by Shun On Factory, one of Mattel's contract vendors, which outsourced the molding and painting of one plastic piece. A subcontractor, Jingying Tampo Printing Processing Factory, used uncertified paint on the recalled piece.

Hi berloga, thanks for posting the news. Mattel (MAT) even closed higher yesterday, after the lower open, despite the negative news. It seems they're priced in.

JAKK didn't make any recall announcement, at least not yet, let's hope we won't have one.

There weren't any news or technical developments for JAKK yesterday, I'll keep holding the stock.

The "JAKK missed the quarter" mentality, from which BigSully1 did very well profiting, is keeping JAKK down.

I maintain that the 2nd quarter is almost irrelevant in the bigger scheme of things of this company for two primary reasons:

1) Most sales happen in the 2nd half, with the 4th quarter being the strongest;

2) The company's biggest bet for the year, the Hannah Montana dolls and related products, weren't yet for sale in 2nd quarter.

I expect the 2nd half to be stronger than expected and JAKK to close 2007 above $30. 

Fundamentally nothing changed in JAKK over the weekend. The stock declined a bit on Friday, but it didn't change the technical picture, which is neutral in my view. I'll keep holding JAKK.

JAKK's chart turned from neutral to bearish, but you know I don't care about the chart, not anymore. I believe the company's pipeline is strong enough for it to meet or exceed management's guidance of $800 M revenue and $2.39 EPS for 2007, and that would certainly put the stock in the $30 area.

I'll keep holding JAKK, despite the technical weakness. A gap up on good news, perhaps leaving an island on the chart, is my expectation for the future.

JAKK is such a marvelous company, it is a shame it is valued at just 9 times earnings. Look at their exciting new Plug it in & Play TV game:

• JAKKS Pacific(R) to Produce Plug It In & Play TV Games(TM) Based on 'Are You Smarter Than A 5th Grader?'(TM) Game Show (http://biz.yahoo.com/prnews/070911/latu050a.html?.v=2)
PR Newswire (Tue 6:00am)

I already know what I'm going to give my little nephews and cousins this Christmas, and it's going to be Plug it in & Play TV games (I'll make sure I'll give myself some too). I don't know about you, but I like simple games ... PlayStation, with all those menu's and options, annoy me. And my 4 year old son, even though he can play the games quite well, he always needs me to go through all the horrible menus before the game ... "dad, dad", well, in his case it is more "pai, pai, vem cá pôr-me o jogo" ;D

And this way of making games with popular TV shows themes, more for the adult public ... is just great to play with your family.

And what about the chart, looking a bit better today, huh? That thing keeps changing and knows little about the future. I would like to make money over the long term by just drawing a few lines ... but I believe it takes a lot more than that.

I'll hold JAKK for the long term.

JAKK continues to invest to diversify its business:

• JAKKS Pacific(R) Signs 'Mr. Men and Little Miss' Licensing Agreement in Lifestyle for 'Tweens (http://biz.yahoo.com/prnews/070913/lath038.html?.v=101)
PR Newswire (Thu, Sep 13)

Considering the many exciting new products JAKK has, I think it is wrong to value the company at 10 times earnings, just because there's that litigation with WWE (which we've already seen is related just with certain Asian countries which represent less than 3% of JAKK's total sales).

So, I believe the stock is just cheap, at least 50% undervalued at this point. Now, what will it take to correct this market inefficiency? I think that if the stock is able to beat its own guidance of $800 M in revenue and $2.39 EPS for 2007 it will be enough, since the market is pricing in a disappointment, like it happened in 2006 and in Q2 2007 (an almost irrelevant quarter due to seasonality).

I'll keep holding JAKK. 

JAKK's CFO will be presenting at AG Edwards conference:

• JAKKS Pacific to Present at the A.G. Edwards' Emerging Growth Conference (http://biz.yahoo.com/bw/070918/20070918005507.html?.v=1)
Business Wire (Tue 6:00am)

It's interesting they're sending the CFO and not the CEO. Also, the conference will be webcast live. Maybe he'll reaffirm or even up guidance for the full year ... I'm sure JAKK's management isn't happy with the valuation of its stock, nor with the market's reaction to that slight miss in Q2 2007.

I'll keep holding JAKK.

Is justice starting to be made on JAKK? Well, a little, but for true justice JAKK should gap up and leave all the people that sold the stock after that irrelevant earnings miss alone in an island.

Perhaps the CFO will talk about the truth today when he speaks at the AG Edwards conference at 12:30 EST.

I'll keep holding JAKK.

JAKK continues to diversify its business:

• JAKKS Pacific Appeals to Little Girls' 'Inner Nancy' With a New Line Based on Fancy Nancy, the New York Times Bestselling Series From HarperCollins Publishers (http://biz.yahoo.com/prnews/070920/lath036.html?.v=101)
PR Newswire (Thu 6:00am)

And, this was just out:

Pokemon heads hitless cast of U.S. holiday toys (http://www.reuters.com/article/marketsNews/idUKN1719065220070920?rpc=44)

"Pokemon is on fire. It's as hot as it's been in about 7 years and it's really the 'Diamond and Pearl' series," said Jim Silver, editor-in-chief of Toy Wishes magazine.

In fact I've been thinking why JAKK would want the Pokemon's rights, it seemed like a thing of the past. Now I know why they wanted it, because it is getting hot again :)

I think this is going to be the first season of Pokemon products for JAKK. More help for the second half.

I'll keep holding JAKK.

David, I don't know much at all about Hannah Montana, but just saw a newscast about the Disney live show near my hometown. There were huge lines waiting for tickets and were sold out within 3 minutes leaving many kids disappointed. Brokers are now selling the $25 tickets for as much as $1350.

Evidently Hannah Montana is a huge sensation and your tenacity will likely pay off, maybe big. I hope they make plenty of the toys so they don't run out too early pre-Christmas and I hope they don't wholesale them too cheaply, because the retail will likely be a huge markup if demand is what I think it will be.

I didn't think I would ever say this, but I bought some of it....maybe more later.

QuoteI didn't think I would ever say this, but I bought some of it....maybe more later.

That's magnificent BigSully1, congrats on your flexibility :)

QuoteDavid, I don't know much at all about Hannah Montana, but just saw a newscast about the Disney live show near my hometown. There were huge lines waiting for tickets and were sold out within 3 minutes leaving many kids disappointed. Brokers are now selling the $25 tickets for as much as $1350.

I don't know her either, but everybody says it's very hot ... JAKK's management speaks with great enthusiasm about Hannah Montana's related products at the conference calls and recently put out a press release on the issue:

• Hannah Montana(TM) and The Cheetah(TM) Girls Dolls Kick Off a Rockin' Holiday Season (http://biz.yahoo.com/prnews/070813/lam065.html?.v=95)
PR Newswire (Mon, Aug 13)

QuoteEvidently Hannah Montana is a huge sensation and your tenacity will likely pay off, maybe big. I hope they make plenty of the toys so they don't run out too early pre-Christmas and I hope they don't wholesale them too cheaply, because the retail will likely be a huge markup if demand is what I think it will be.

Yeah, I hope JAKK makes things right and doesn't get too anxious to hand out its products at cheap prices. Another good thing about Hannah Montana and JAKK is that JAKK bought the licensing rights when she was still relatively unknown, at least that was what the CFO said at the AG Edwards conference, so probably it was a cheap contract.

Considering JAKK's pipeline of new products I would say WWE will lose a lot of its importance as a revenue and profit stream for the company. This means that lawsuit and the possibility of WWE and JAKK ending their relationship in 2009 is losing relevance (but I still think this final outcome is highly unlikely). And all this should lead to JAKK having an earnings multiple more in line with the toys industry, which is 23.3 (http://finance.yahoo.com/q/co?s=JAKK).

Now I've noticed that there are more analysts covering the stock, and they expect $2.46 EPS for JAKK in 2007 (http://finance.yahoo.com/q/co?s=JAKK), above the $2.39 EPS the company gave as guidance. Interesting.

I'll keep holding JAKK (welcome aboard BigSully1 :))

JAKK went down 4.6% yesterday and it makes me sick because I don't understand it, there's no explanation from the fundamental side of the equation.

Only the chart can explain yesterday's action ... the stock touched the 50 days SMA resistance level and it went down on volume above average.

But you know, if the 50 days SMA is the reason why traders sold JAKK, they'll equally buy the stock when it closes above this moving average, currently at $23.9. Their hands shake as leafs in the wind.

I expect all this JAKK drama to end when the company reports 3rd quarter earnings and reaffirms or even raises its full year guidance. Then the stock will gap up and leave the $18 - $28 area as an island.

I'll keep holding JAKK.

FYI From Financial Times  ;D

Britney's not as toxic as you might think
By James Altucher FT.com, 03:35 BST Sep 25, 2007

I was a sore loser when I was younger. This is going to sound a bit geeky but when I was in 11th grade and playing a game of chess for the honour of my high school against the head of the chess team from a neighbouring school, I lost the game and was very upset about it. In one motion with my arm I knocked all the pieces to the floor.

It gets worse. I didn't go back to school the next day or the day after that. I don't even think I went back for the whole next week. It was a sickness.
I would hide outside until I could hear both my parents' cars leave the driveway for work, then I'd take the bus into Princeton and meet John Nash to play some chess. Remember the film, A Beautiful Mind, about a brilliant economist (played eloquently by Russell Crowe) who then, very sadly, went crazy?
Well, this John Nash wasn't him. It was his son. He had just received his PhD in mathematics and was very much like his father in a lot of ways. He was living at home and we'd get together and play chess when I cut school. He was a strong, master-level player who would tend to get nervous in tournaments and obsessively stroke his unkempt beard.
I couldn't bear the thought of going back to school. In my mind I was labelled a loser even though nobody but me and my opponent really cared about the outcome of that game. But as human beings we tend to instinctively attempt to rank and label ourselves in some way. So when I was in high school I identified myself as a "strong chess player" and anything that got in the way of that made me feel less worthy of myself. You can imagine the number of girls who were attracted to me when I so labelled myself.
Much later, it wasn't the number of chess games I won or lost that I used to establish my self-worth, but money gained or lost. There were only two situations I found myself in – "not having any money" and "not having enough money". Neither is good.
Not having any money means a lack of freedom. While the desire for anything (including freedom) creates suffering, not having any money at all means you have to be enormously creative to get out from under the whims of those who have no creativity.
In spite of personal finance television shows, books and articles, the elusive "number" one needs remains just that. And it's the quest for more that could trigger the conclusion of a life lived without consequence when lying on one's deathbed.
This brings me to Britney Spears. I have never listened to her music. Nor have I seen her dance, including at the famous VMA awards (nor do I know what "VMA" stands for). I read Page 6, though, and follow her story and its very intimate details. Once I read a profile that suggested she was a brilliant businesswoman and manager of her own brand, a task she has let slide lately. But we can forgive her because she is 24 and we all remember what that was like.
I stood on Wall Street the other day doing a project for thestreet.com. I asked passers-by: "Britney, buy or sell?" and the most common answer was "sell". So this young beautiful thing, this lost girl who sings "Gimme More" was consequential enough to inspire a flight of liquidity into – what? – more inspired personal brands?
When everyone says "sell", we know it's time to buy. This suggests some stocks.
Skechers – Britney is a celebrity endorser for Skechers footwear and I'm personally excited about their "Cali gear" line, which is similar to Crocs.
Jakks Pacific makes a Britney doll. The company trades for less than five times earnings before interest, taxes, depreciation and amortisation and will have a strong run into Christmas on the heels of the problems facing Mattel.Elizabeth Arden makes a Britney fragrance as well as perfumes for other celebrities. At 10 times ebitda and with analysts steadily upping estimates, I think the company is poised for an upside surprise at its next earnings report. I would place the bet now, since it's relatively safe at this multiple.
Pepsi – Britney is a celebrity endorser for Pepsi. Sugared water doesn't go out of fashion in a recession. And with a 2 per cent dividend and growing foreign sales, it's hard to find a safer bet.
And, of course, Sony, which puts out Britney's single "Gimme More". With 100 per cent earnings growth over the past year, I think this will be the ringleader of the Britney snapback rally.
When I wake up, the twin demons of fear of loss and angst over self-worth try to guide my day. And every now and then I still knock over the chess pieces when I lose. But if I'd never done that I wouldn't have had any material for this fantastic column – if I say so myself.
[email protected]

Isn't the SMA50 crossing the SMA200 forming a Golden Cross?

Quote from: berloga on September 25, 2007, 09:31:50 AM
Isn't the SMA50 crossing the SMA200 forming a Golden Cross?

I think it's behaving  bullish and will likely breakout soon? I've got a full position now.

Quote from: berloga on September 25, 2007, 09:31:50 AM
Isn't the SMA50 crossing the SMA200 forming a Golden Cross?

I think it was Terliso who invented the name, so you should ask him, but I think he calls the "golden cross" when the 50 days crosses above the 200 days, and not when the 50 goes below the 200, which was what was happening on JAKK (not if the stock closes where it is now).

I wonder who were the suckers selling JAKK down 4.6% yesterday (oops, I shouldn't say this, I'm the one who's losing 10% on the stock), JAKK is up 4.5% today.

Quote from: BigSully1 on September 25, 2007, 10:26:28 AM

Quote from: berloga on September 25, 2007, 09:31:50 AM
Isn't the SMA50 crossing the SMA200 forming a Golden Cross?

I think it's behaving  bullish and will likely breakout soon? I've got a full position now.

lLooks like we are going to get a nice big engulfing candle, completely swallowing up the previous 3 days red candles. Looks ready to burst at the seams, IMO.

That's a beautiful article JKN, this market is so inefficient that someone has to write on the Financial Times a stock is attractive for it to rise.

JAKK has been active on the press release machine, here are two of them:

• Care Bears(TM) Celebrate 25th Anniversary in New York City (http://biz.yahoo.com/bw/070925/20070925005368.html?.v=1)
Business Wire (Tue 7:30am)

• Nickelodeon & Viacom Consumer Products Awards Neopets Master Toy License to JAKKS Pacific (http://biz.yahoo.com/bw/070926/20070926005467.html?.v=1)
Business Wire (Wed 6:00am)

5.9 million unique users per month on www.neopets.com is big! I guess JAKK's management was outraged by the market's reaction to the 2nd quarter results and thinks it had something to do with the communication it has with investors or something. They also probably don't enjoy the way the company is valued, at 10 times earnings, and probably know it is because of the litigation with WWE, so they're doing everything they can to diversify their business and show us their actions.

Anyway, the big news of the day for JAKK is that BigSully1 is now an investor in the stock. This should be enough to push it towards $30 and beyond.

I'll keep holding JAKK.

(just one more thing: the "technical guys" who sold on Monday because of the 50 days SMA resistance should be buying today, to be coherent, since the stock closed above the 50 days SMA - just until the next reliable (only in their minds) technical signal).

Nice push up from JAKK yesterday, on volume above average. The way I see the chart evolving, the $28 level will act as a resistance level until we get some very meaningful news, as the company beating estimates for the 3rd quarter or raising full year guidance.

When that happens I believe the stock will immediately open over $30 and leave an island on the chart, roughly between $18 and $28. Of course, the scenario may not play out this way, the important thing is to have fundamentals supporting the long term rise of the stock. And that we have.

JAKK's move seems solid, the stock consolidated a bit on low volume. I'll continue holding JAKK.

JAKK's management is smart, anticipating trends. They bought Hanna Montana's and Pokemon's licenses when these were relatively unknown or a thing of the past in Pokemon's case, just before they exploded in popularity.

It seems the market is starting to see a very strong 2nd half for JAKK, and seeing the nonsense it was selling the stock that way just because of an almost irrelevant 5 cents miss in a seasonally weak period, before the new products hit the stores.

I'll keep holding JAKK.

JAKK is coming back very strongly and entered the "gap territory". The gap will be closed at $29.5, but the reasons behind the move tell me JAKK will reward patient investors a lot more than just a close the gap move.

I believe this because the reasons behind the move seem to be that JAKK is having a stronger than expected 2nd half, because its new products are getting a lot of traction in stores. This may mean the company will not only deliver on its $2.39 EPS promise, but probably exceed it.

Another reason is that JAKK worked a lot to diversify itself from being mainly a WWE action figures company. This should promote a multiple expansion, because with more diversification, comes less risk.

My take is JAKK should trade at 20 times earnings like any other major toy company. If JAKK makes, say, $2.5 a share and this type of multiple expansion occurs, we'll be looking at a $50 a share stock by years end. This is my expectation, I'll keep holding JAKK.

It seems JAKK is having just a bit of trouble surpassing the $28 short term resistance level at first attempt. I would actually prefer if the stock were to stay between $26 and $28 until we get some meaningful earnings news, and then a gap up with the stock opening above $30 and never looking back. Somehow I believe this behavior would harm the bears in this stock more, and they deserve to be as punished as an investor can be ... Lol, where did I get this rage? >:D

BigSully1, with his flexibility, did much better, going with the flow.

Anyway, I'll continue holding JAKK for the long term.

QuoteI would actually prefer if the stock were to stay between $26 and $28 until we get some meaningful earnings news, and then a gap up with the stock opening above $30 and never looking back.

Be careful with what you wish for ... it may actually happen :)

Let's see if JAKK can sustain the $26 level, making a range between $26 and $28. I'll keep holding JAKK for the long term.

JAKK did all right yesterday, as I want it to be kept between $26 and $28 until the next earnings news ... then a gap up to more than $30 a share, as management increases 2007 full year guidance, that would be a fundamental development which could take JAKK towards $50 a share.

I'll keep holding JAKK.

Check this out folks, at www.marketwatch.com:

Miley mania rocks box-office prices
Your girls want 'Hannah Montana' tickets; you can forget the Boss (http://www.marketwatch.com/news/story/your-girls-need-hannah-montana/story.aspx?guid=%7BA469CED1%2D3688%2D4C68%2DB051%2D40503AB064BB%7D)

It's a mania. Prepare for a blowout 2nd half for JAKK, they could sell their Hannah Montana dolls for $100 a piece or more, they would sell them all :o

Quote from: David Randolph on October 05, 2007, 01:26:23 PM
Check this out folks, at www.marketwatch.com:

Miley mania rocks box-office prices
Your girls want 'Hannah Montana' tickets; you can forget the Boss (http://www.marketwatch.com/news/story/your-girls-need-hannah-montana/story.aspx?guid=%7BA469CED1%2D3688%2D4C68%2DB051%2D40503AB064BB%7D)

It's a mania. Prepare for a blowout 2nd half for JAKK, they could sell their Hannah Montana dolls for $100 a piece or more, they would sell them all :o

Well now I know what the Tivo'd newscast, was about last night and won't need to listen. Like you David, I hope this doesn't run up too fast. I don't want to be tempted to take profits, want to at least  push them into next year. Good to see you excited on this one, you deserve a nice reward on it.

QuoteWell now I know what the Tivo'd newscast, was about last night and won't need to listen. Like you David, I hope this doesn't run up too fast. I don't want to be tempted to take profits, want to at least  push them into next year. Good to see you excited on this one, you deserve a nice reward on it.

Thanks, I hope justice will be made :)

JAKK took another step to diversify and grow its business:

• JAKKS Pacific Signs Master Toy License for Discovery Kids (http://biz.yahoo.com/prnews/071008/lam022.html?.v=101)
PR Newswire (Mon 6:00am)

They're really investing for the future of the company and I expect these investments to earn a nice return in terms of EPS for shareholders, which will ultimately translate into a higher stock price.

I'll keep holding JAKK for the long term.

JAKK continues to trade within the $26 - $28 range, as expected. In 2006 the 3rd quarter earnings release date was November 9, so I expect it to be around that date this year.

I wish JAKK stays around current levels and then, when the company reports earnings and pushes up full year revenue and EPS guidance (currently at $800 M for revenue and $2.39 for EPS), it makes a gigantic gap up, eating all the bears and shorts alive >:D

I have no doubts that Hannah Montana, Pokemon and Plug it in & play TV games are doing well in the retail market. I wonder what is the average price for an Hannah Montana doll? Let me check if it is available at www.amazon.com:

Hannah Montana related products (http://www.amazon.com/Hannah-Montana-Concert-Collection-Singing/dp/B000P41X8E/ref=sr_1_14/104-0449599-6037566?ie=UTF8&s=toys-and-games&qid=1191875291&sr=8-14)

I see JAKK is riding Hannah Montana's wave as much as it can ... it isn't just dolls, but several related products. Look at that backstage selling for $30 ... and a wig selling for $20. These products, made in China (of course), probably have a fat net profit margin.

I'll keep holding JAKK.

Hey David!
Jim Cramer just found your stock---JAKK! He is talking it up BIG. He says it is the next "Hot Stock".
Great pick David! Put your seat belt on!

Here is the recap if you are interested in his viewpoint:
http://www.thestreet.com/_yahoo/funds/madmoneywrap/10383429_2.html (http://www.thestreet.com/_yahoo/funds/madmoneywrap/10383429_2.html)

David,

My account shows an earnings date of October 15th

Brad

Hanna Montana is a big time teen and kid idol. Even my 3.5 yr old is a fan of Hanna Montana. Having said that I would shop for Wii for my kid rather then Ms. Montana during holidays.

Quote from: Houlahan on October 08, 2007, 06:46:18 PM
Hey David!
Jim Cramer just found your stock---JAKK! He is talking it up BIG. He says it is the next "Hot Stock".
Great pick David! Put your seat belt on!

Here is the recap if you are interested in his viewpoint:
http://www.thestreet.com/_yahoo/funds/madmoneywrap/10383429_2.html (http://www.thestreet.com/_yahoo/funds/madmoneywrap/10383429_2.html)

Thanks for this information Houlahan :)

The interesting part is the following:

«On Wednesday, Jakks is hosting a big analyst meeting, and if the company preannounces better-than-expected numbers for the fourth quarter it could shoot higher, Cramer said.»

If indeed JAKK raises its full year revenue and EPS guidance it will undoubtedly shoot to new all time highs above $31.42, because investors were pricing in a disappointment like it happened in 2006. If not the stock will come down to "pre-Cramer" levels.

Anyway, longer term, I believe the only way is up for JAKK. 

This is weird, Cramer's article posted by Houlahan is dated October 8th (Monday) and it says the following:

«On Wednesday, Jakks is hosting a big analyst meeting, and if the company preannounces better-than-expected numbers for the fourth quarter it could shoot higher, Cramer said.»

Does he mean today? It's just that I don't see any indication of any meeting between JAKK's management and analysts today. I think that if that meeting were to exist and they were to say anything material for the share price they would have to pre-announce it and webcast it, or else, analysts will have access to information before other market participants, which I believe is illegal.

Does anyone knows something about the SEC laws on this subject? Thanks.

Today or later, I agree with Cramer when he says JAKK will, at some point, increase its 2007 revenue and EPS guidance, because their products are very hot for this shopping season and that wasn't expected at start, at least not by investors, who sold the stock down 40% just because of a 5 cents earnings miss on a less relevant and seasonally weak quarter.

I'll be watching today's activity on JAKK, but whatever happens, I'll continue holding the stock for the long term.

I emailed TheStreet.com about the big analyst meeting for today (Wednesday) This will be interesting to see what or if they respond.

Quote from: Houlahan on October 10, 2007, 09:10:23 PM
I emailed TheStreet.com about the big analyst meeting for today (Wednesday) This will be interesting to see what or if they respond.

Yeah, there wasn't any analyst meeting. Cramer probably made some kind of confusion ... speaking on national TV he should have some staff to confirm everything he's about to say. The incredible part is that there were about $28 M traded in JAKK on that erroneous information.

Because there wasn't any analyst meeting the stock fell back down to prior levels, which is perfectly fine for me. Hopefully the "Cramer followers" will leave JAKK, because this stock is not for them ... anyway, I do believe Cramer is right when he predicts management will raise 2007 guidance (or beat it), even though he was wrong on timing.

I'll continue holding JAKK for the long term.

After closing "Cramer's gap" on Thursday, JAKK rose 3.2% on Friday. But the stock is still inside the now named "easily scared money" island. I hope it stays within the island, just on the coast of it, that is, between $26 and $28.5, and then, when JAKK raises its full year 2007 guidance (I think this will happen at the 3rd quarter earnings release), it just gaps up over $31 and never looks back on its way to $50.

I've changed JAKK's island name to "fast money island", I think it is more appropriate this way, because BigSully1 wasn't scared when he sold JAKK short, he was fast. And profited from being fast.

Investors like me haven't been rewarded by their loyalty to JAKK, but I expect this to change soon, as I see $40 a share or more coming over in the next 6 months, as the company raises guidance or beats 2007 estimates.

JAKK keeps investing in innovative and attractive products:

• American Kennel Club(R)-Branded Travel Convenience Meals for Dogs Target On-the-Go Pet Owners (http://biz.yahoo.com/prnews/071016/latu051.html?.v=101)
PR Newswire (Tue 6:00am)

It is also getting more and more diversified by the day. It's a non-sense to price it at 11 times earnings.

The stock is doing what it is supposed to do, which is to stay within the fast money island and then gap up above $30 when the company reports 3rd quarter earnings and hopefully raises full year 2007 guidance, as I think it will.

It doesn't matter which press releases or product launches JAKK's management does, the stock is stuck between $26 and $28, as I expected.

Only one thing can make the stock move out of this range in a meaningful way, and that is a revision to the 2007 revenue and earnings guidance.

I'm fully confident that this revision will be on the upside, because I have no doubts that the company's products are in very high demand this shopping season.

I'll continue holding JAKK.

And this was just out, JAKK will announce 3rd quarter earnings next Monday:

• JAKKS Pacific to Announce Results for Third Quarter 2007 (http://biz.yahoo.com/bw/071017/20071017005459.html?.v=1)
Business Wire (Wed 6:30am)

Interesting what they say, it isn't usual:

«The Company will also hold a teleconference and webcast to discuss these results and may discuss future plans and prospects.»

Bullish toy outlook from China:

Reuters 10/17/07

BEIJING (Reuters) - Orders for Chinese toys are on the rise in the run-up to Christmas despite a wave of product recalls that have shaken confidence in the safety of Chinese-made goods, the country's product safety chief said on Wednesday.


Millions of Chinese-made toys have been recalled this year, mostly because of excessive levels of lead in paint and other components, stoking U.S. complaints that lax quality controls were threatening consumers.

But Li Changjiang, the head of General Administration of Quality Supervision, Inspection and Quarantine, said factory owners in the southern province of Guangdong, China's manufacturing heartland, told him business was booming.

"They told me, 'our orders are all up', the workers have to work overtime or the orders cannot be met," Li told reporters. "When I heard this, I was shocked."

Problems with Chinese exports prompted the world's biggest toy maker, Mattel Inc, to recall about 21 million of its Chinese-made toys earlier this year. A senior Mattel executive later apologized to China for the trouble the recall had caused.

But in the past few weeks another half a million toys ranging from Winnie the Pooh bookmarks to Baby Einstein blocks were recalled in the United States because of levels of lead, which can be toxic in large amounts.

Li has been spearheading China's public relations drive to restore confidence in the "made-in-China" label, rounding up manufacturers for a crash course in quality supervision and urging companies to make clear in contracts their obligations.

"These unqualified products, especially products exported through illegal channels, have affected the credibility of some Chinese products," he said.

But he also said some of the concern abroad was driven by trade protectionism, and that the quality issue "should not be exaggerated."

Tainted Chinese goods have ranged from tires and toothpaste to drugs and seafood.

The number of orders for Chinese toys showed that companies were still happy to manufacture in China, Li said, adding that authorities would enhance supervision and increase severity of punishments to crack down on illegally made products.

"Ahead of Christmas, China's toy-makers will provide safe and reliable toys to children around the world by ensuring their quality," Li said.

"So I urge the importers of Chinese toys to come to China and buy more Chinese toys and I wish children around the world a Merry Christmas."

test Nielsen ratings for cable tv shows.Looks like JAKK should have a blowout quarter


Cable: Top 15
Rank Show name Network Viewers in millions

1. Cowboys vs. Bills ESPN 13.0

2. Indians vs. Yankees  TBS 9.2

3. Twitches Too Disney 7.0

4. Wiz./Waverly Pl. Disney 5.9

5. Rockies vs. D'backs  TBS 5.3

6. D'backs vs. Rockies  TBS 5.2

7.  Hannah Montana (Fri, 10 p.m.) Disney 5.0

8. Hannah Montana (Fri, 10:30 p.m.) Disney 4.3

9. High School Musical 2 Disney 4.2

10. WWE Raw (Mon, 10 p.m.) USA 3.9

* WWE Raw (Mon, 9 p.m.) USA  3.9

12. Twitches Disney 3.6

13. Law & Order: CI USA 3.4

* Zoey/Curse of PCA Nickelodeon 3.4

* Zack & Cody Disney 3.4

Thanks for the article and Nielsen ratings, capricho and basanlas :)

Expectations for JAKK in Q3 and full year 2007 are the following:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=41157;image)

Now I see that I've been so focused on the market reaction after that slight earnings miss in Q2 and the company's product pipeline that I missed the fact that Q3 is actually the strongest quarter for JAKK from a seasonal standpoint.

It has been that way historically and analyst's estimates confirm it. I guess this is because retailers buy the toys from JAKK in advance of Christmas.

I remember that JAKK's CEO talked about how retailers were enthusiastic about Hannah Montana's related products.

I'm confident that JAKK will raise full year 2007 guidance at the conference call, and possibly even provide 2008 guidance.

Today would be the last day to sell before earnings, but I'm not going to do that, I'll hold through earnings and probably beyond.

JAKK's 3rd quarter earnings will be released on Monday before the open, so I'll write a new update right after that. Moreover I'll listen to the conference call (scheduled for 10 AM ET) and will give you some highlights.

The trading plan will be set tomorrow after earnings.

I wonder if JAKK will still be able to release earnings tomorrow as their Corporate Headquarters is on the PCH in Malibu and the fires down there are pretty bad... http://www.cnn.com/2007/US/10/21/wildfire.ca/index.html

Nevermind, earnings are out!

Jakks Pacific 3rd-quarter net up 17% on 7.6% higher sales:

JAKK 26.55, -0.19, -0.7%) the Malibu, Calif., maker of toys and consumer products, reported third-quarter earnings rose 17% on 7.6% higher sales. Net income reached $47.3 million, or $1.45 a share, from $40.5 million, or $1.28, in the year-earlier period. Sales rose to $318.4 million from $295.8 million. A survey of analysts by Thomson Financial produced a consensus estimate of $1.30 of profit on sales of $301 million for the quarter. The company affirmed that it would at least match its 2007 estimate of earnings of $2.39 a share on sales of $800 million. Thomson's survey is looking for earnings of $2.38 and sales of $802 million

Quote from: trexkerry on October 22, 2007, 05:35:04 AM
Nevermind, earnings are out!

Jakks Pacific 3rd-quarter net up 17% on 7.6% higher sales:

JAKK 26.55, -0.19, -0.7%) the Malibu, Calif., maker of toys and consumer products, reported third-quarter earnings rose 17% on 7.6% higher sales. Net income reached $47.3 million, or $1.45 a share, from $40.5 million, or $1.28, in the year-earlier period. Sales rose to $318.4 million from $295.8 million. A survey of analysts by Thomson Financial produced a consensus estimate of $1.30 of profit on sales of $301 million for the quarter. The company affirmed that it would at least match its 2007 estimate of earnings of $2.39 a share on sales of $800 million. Thomson's survey is looking for earnings of $2.38 and sales of $802 million

Beat estimates by 15 cents :)

• JAKKS Pacific(R) Reports 2007 Third Quarter Results (http://biz.yahoo.com/bw/071022/20071022005550.html?.v=1)
Business Wire (Mon 3:30am)

The following gives me absolute confidence that they'll beat 2007 guidance:

«Net sales for the nine months ended September 30, 2007 were $572.0 million, compared to $527.1 million during the same period in 2006. Net income for the first nine months of 2007 was $55.6 million, or $1.75 per diluted share, compared to the first nine months of 2006 earnings of $49.2 million, or $1.57 per diluted share.»

They're running 18 cents ahead when compared to what they made in 2006, which was EPS of $2.3. So, I expect at least $2.48, compared with the $2.39 guidance. However, given the positive momentum evidenced in Q3 and the following comments ...

"We are proud of our most expansive product line to date and are seeing positive momentum at retail thus far into the fourth quarter. We believe both JAKKS and our product lines are well positioned for the 2007 holiday season."

... I believe the 4th quarter of 2007 will be stronger than Q4 in 2006, when JAKK made $0.73 EPS. If they make, say, $0.8 in the 4th quarter, the full year EPS will be $2.55.

The stock appears to be trading at 10.4 times earnings and growing nicely, while the Toys industry trades at 20.2 times earnings.

JAKK should gap up over $30 this morning, we'll see how the market responds to the fundamental information. I'll continue holding JAKK for the long term.

This market can be very inefficient at times. Just notice that Cramer's "bullshit" and misleading information brought more volume and price appreciation to JAKK than the company's spectacular 3rd quarter earnings release ::)

So, the market's response wasn't a big gap up as I was expecting, it will otherwise be a slow but consistent rise between now and the end the of the year.

I just heard the conference call and I have no doubts that JAKK will firmly exceed its 2007 guidance of $800 M revenue and $2.39 EPS. It's just that after the market's response to the 2nd quarter slight earnings miss, management prefers to be conservative and beat guidance when they report full year numbers in February.

Hannah Montana related products are still ramping up towards the holiday shopping season, as the products still contributed with less than 10% to overall sales, which came in better than expected.

I expect JAKK to close this year around $35 a share, that is, about 25% higher than what it is now, and further upside in 2008.

I'll continue holding JAKK for the long term.

JAKK makes me scratch my head ... I don't understand why it doesn't go up, even though I know this market can be very inefficient at times, and, as I've said, JAKK is a good example, since Cramer's erroneous information brought more volume and price appreciation to JAKK than the spectacular 3rd quarter earnings.

Hmm, but now I got a "click", I remember Cramer said "management will raise guidance", and since they didn't, perhaps some people felt disappointed and are selling the stock.

However, from reading the earnings press release and listening to the conference call, I have no doubts that JAKK will beat the 2007 guidance by a good margin, even though they didn't raise it. My take is management didn't raise guidance because they prefer to beat it, since when they slightly missed it in Q2 the stock dived 40% ???

I'll continue holding JAKK for the long term.

When I saw JAKK trading below $26 on Friday I had to pinch myself to see if I wasn't having a nightmare or something, because it doesn't make any sense at all while I'm awake. Fortunately it closed above $26 to alleviate my pain.

Of course, I'm exaggerating here and the pain doesn't come from winning or losing a few dollars, it comes from the fact that the market response to events is so different from what I think it should be. It makes me think if I am wrong, or not seeing something.

But, at least for a couple weeks more I'll just keep believing the market is very inefficient at times and it may take several days to respond to a meaningful positive event, like JAKK's 3rd quarter earnings release (http://biz.yahoo.com/ap/071022/earns_jakks_pacific.html?.v=1).

Hannah Montana is defying Barbie this holiday season:

Move over Barbie, Hannah Montana is here (http://www.marketwatch.com/news/story/barbie-seeing-fresh-competition-holiday/story.aspx?guid=%7BEF3147EE%2D14F3%2D4E82%2DA5BA%2DA33B123D913E%7D&siteid=yhoof)

I have no doubts JAKK will earn more than $2.39 in 2007 and the long term outlook is quite appealing. It doesn't make any sense to have this American company trading at 10-12 times earnings.

I'll continue holding JAKK for the long term.

Hannah Montana is gathering more momentum than Barbie for the upcoming holiday season:

Move over Barbie, Hannah Montana is here (http://www.marketwatch.com/news/story/barbie-seeing-fresh-competition-holiday/story.aspx?guid=%7BEF3147EE%2D14F3%2D4E82%2DA5BA%2DA33B123D913E%7D&dist=TQP_Mod_mktwN)

And Barbie's owner, Mattel, trades at 14.65 2007 earnings and JAKK trades at 10.4 times earnings (I'm considering $2.5 EPS in 2007).

This isn't right. JAKK need to go up at least 40% ... I'm pretty sure we'll see JAKK above $35 in six months time and I'll continue holding JAKK for the long term.

While JAKK was trading below $26 I felt sad and talked to my wife (who by the way reads most of my daily updates and enjoys talking about the stock market), saying "I don't understand this stock". And she told me ... "JAKK's problem is that it is an old business, it doesn't have sex-appeal".

Probably she's right, that's JAKK's problem over the short term. But, if we think of Warren Buffet's and Peter Lynch strategies, for example, this is exactly the kind of businesses they would love to buy.

Buffet has been buying railroads recently, can you think of an older and more boring business? And yet he's the greatest investor ever, isn't he?

Well, JAKK is back above $26 now, so let me just forget that it ever closed below it. I remain confident that we'll see $35 a share before May 2008 and I'll keep holding JAKK for the long term.

QuoteWell, JAKK is back above $26 now, so let me just forget that it ever closed below it. I remain confident that we'll see $35 a share before May 2008 and I'll keep holding JAKK for the long term.

Brrr, what a nasty sell off yesterday. Technically we still have the 50 and 200 days SMA supports, and a small gap to perhaps close at $24.37 (2.4% below yesterday's close).

Anyway, JAKK is trading below 10 times earnings and I see these earnings as very reliable, whatever the economic environment is, because, as JAKK's CEO says, JAKK sells cheap toys which most US parents can afford without any problem, and one thing parents won't save is on cheap toys for their children.

JAKK is very cheap so the downside is limited by the company's value and fundamental trends show persistent growth over the years.

I'll continue holding JAKK for the long term.

QuoteBrrr, what a nasty sell off yesterday. Technically we still have the 50 and 200 days SMA supports, and a small gap to perhaps close at $24.37 (2.4% below yesterday's close).

JAKK really doesn't like to leave gaps open (at least not the ones in the south part of the chart), it had to fill that small gap at $24.37, even though fundamentals clearly pointed in the other direction. It also touched the 50 days and 200 days SMA supports.

I expect JAKK to restart trading on fundamental information and move towards $35 a share over the next 6 months or so. I'll keep holding JAKK for the long term.

JAKK put out another press release, but it seems nobody cares:

• WWE(R) SmackDown(R) vs. Raw(R) 2008 Kicks off Global Marketing Campaign on WWE(R) Monday Night RAW(R) (http://biz.yahoo.com/bw/071105/20071105006608.html?.v=1)
Business Wire (Mon 4:01pm)

I hope the game sells well, THQ and JAKK seem to be doing a tremendous promotional effort. THQ's partnership is mildly important for JAKK, it contributed with $3.117 M to net income in the nine month period so far in 2007, or 5.6% of the $55.59 M total net income.

JAKK is so undervalued it hurts. The Fools did a promotional article where they mentioned JAKK:

• A Triple in the Making (http://us.rd.yahoo.com/finance/external/mfool/SIG=12e6260kg/*http://www.fool.com/investing/general/2007/11/05/a-triple-in-the-making.aspx?source=eptyholnk303100&logvisit=y&npu=y)
at Motley Fool (Mon 3:02pm)

If I were Warren Buffet I would just buy this company. Since I'm not I'll just sit tight and keep holding my shares for the long term.

David, I agree with your wife.  :) JAKK is not sexy. At least it is not as sexy as MCZ.

Quote from: David Randolph on November 01, 2007, 05:31:19 AM
While JAKK was trading below $26 I felt sad and talked to my wife (who by the way reads most of my daily updates and enjoys talking about the stock market), saying "I don't understand this stock". And she told me ... "JAKK's problem is that it is an old business, it doesn't have sex-appeal".

Probably she's right, that's JAKK's problem over the short term. But, if we think of Warren Buffet's and Peter Lynch strategies, for example, this is exactly the kind of businesses they would love to buy.

Buffet has been buying railroads recently, can you think of an older and more boring business? And yet he's the greatest investor ever, isn't he?

Well, JAKK is back above $26 now, so let me just forget that it ever closed below it. I remain confident that we'll see $35 a share before May 2008 and I'll keep holding JAKK for the long term.

QuoteDavid, I agree with your wife. :) JAKK is not sexy. At least it is not as sexy as MCZ.

JAKK is 10 times larger than MCZ, it's not comparable. MCZ's operations compete, in my view, with a small harm of JAKK's business, which is the Plug it in & Play TV games. Comparing the two offers I prefer the 2nd, because it costs less and it isn't just a controller, it brings the whole game.

Anyway, good luck with MCZ hyhl, I hope it reaches $2 :)

JAKK is another holding of the Main Portfolio which is independent of the economic cycle. And it is trading at about 10 times earnings, while growing them nicely.

I'll keep holding JAKK for the long term.

JAKK is a growing American company trading at less than 10 times earnings. It is a safe investment which doesn't depend on the economic cycle (even though several analysts think it does). The stock is undervalued and I enjoy the business model and fundamental trends. Nothing technical or general market related will shake me out of the conviction that we'll see a much higher JAKK 12 months from now.

I'll keep holding JAKK for the long term.

JAKK didn't raise its 2007 full year guidance, and I guess that's why investors didn't feel encouraged by the 3rd quarter earnings release. But I believe there's plenty of evidence that in the end JAKK will beat the $800 M revenue and $2.39 EPS guidance when they report the actual numbers.

When JAKK reports something like $2.5 - $2.7 EPS in 2007 I expect investors to see how undervalued this company is and they'll push it up to $35, at least that.

I'll keep holding JAKK for the long term.

JAKK is already trading at a recession/bear market level valuation. Below 10 times earnings while it grows them nicely: EPS was $0.83 in 2003, $1.49 in 2004, $2.06 in 2005 and $2.3 in 2006. For 2007 I expect at least $2.5.

My take is JAKK won't go down much more from here and when this cloud of pessimism lifts the stock will move towards the $35 - $40 range.

I'll keep holding JAKK for the long term.

Quote from: David Randolph on November 13, 2007, 04:53:41 AM
JAKK is already trading at a recession/bear market level valuation. Below 10 times earnings while it grows them nicely: EPS was $0.83 in 2003, $1.49 in 2004, $2.06 in 2005 and $2.3 in 2006. For 2007 I expect at least $2.5.

My take is JAKK won't go down much more from here and when this cloud of pessimism lifts the stock will move towards the $35 - $40 range.

I'll keep holding JAKK for the long term.

I don't remember David, or any one else discussing the lead in toys problem that has plagued some other toy companies here in the US. My take on the low multiple is the fear of a massive recall, caused  by lead in the paint or elsewhere (it is sometimes found in the plastic itself) of a toy. If JAKK has a good quality control department, this might not happen to them, if not and a recall does occur, I would expect additional multiple contraction. If a recall does not occur, with JAKK or any other toy manufacturer, multiples will expand. Perhaps someone could email them asking what precautions they are taking to prevent a recall due to lead contamination?

A secondary reason is the fear of a significant recession occurring in the US. While I don't see this as a high probability (US exports are up on the weak dollar- more US products = more US jobs), it is possible the market could become very bearish based just on the fear of a recession. Also, I agree with David that even if the economy does slow, it won't impact toy buying for over indulged American children, at least not during the Christmas season.

QuoteI don't remember David, or any one else discussing the lead in toys problem that has plagued some other toy companies here in the US. My take on the low multiple is the fear of a massive recall, caused  by lead in the paint or elsewhere (it is sometimes found in the plastic itself) of a toy. If JAKK has a good quality control department, this might not happen to them, if not and a recall does occur, I would expect additional multiple contraction. If a recall does not occur, with JAKK or any other toy manufacturer, multiples will expand. Perhaps someone could email them asking what precautions they are taking to prevent a recall due to lead contamination?

They talked a lot about this issue in the latest conference call. Personally I believe the recalls are a non-event, an infinitesimal percentage of products sold. JAKK trades at a lower multiple (JAKK is 10) than other toy companies which had recalls (MAT, for example, trades at 15 times 2007 estimated EPS, 50% more than JAKK).

QuoteA secondary reason is the fear of a significant recession occurring in the US. While I don't see this as a high probability (US exports are up on the weak dollar- more US products = more US jobs), it is possible the market could become very bearish based just on the fear of a recession. Also, I agree with David that even if the economy does slow, it won't impact toy buying for over indulged American children, at least not during the Christmas season.

Yep, and JAKK makes very cheap toys (most below $20 and many below $10).

JAKK has been dead money not just since I bought it, but over the past eight years :P Fundamentals continue to improve and yet the stock doesn't rise, because the multiple keeps contracting. At some point something has to give, or fundamentals turn south (I don't see it) or the market finally recognizes the company's long term value.

Maybe when the company beats its 2007 guidance and issues 2008 guidance, in February 2008, the second hypothesis happens.

I'll continue holding JAKK for the long term.

Today I want to tell you how JAKK is doing here in Portugal, which as you probably already know is where I live. Portugal is by itself a small and peripheral European country, but it can give us some clues about how JAKK is doing in the rest of Europe.

Europe still represents a small percentage of JAKK's sales (5.1%) ...

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=41964;image)

... but it is growing quite fast, roughly 60% from the year ago levels.

And I guess it will grow even faster in the future, because, to my big surprise, on the news here in Portugal I learned that the Wrestling toys from Jakks Pacific are one of the top 3 best selling toys for this Christmas :o I believe this is amazing because these toys not even existed here last year.

This weekend I went ahead and bought a Plug it In & Play TV game for my 4 year old son, but it was I who ended playing Ms. Pacman.  ;D He enjoyed the games a lot too (5 games for 29 euros - a bit expensive, it is a lot cheaper in the US) and didn't want to go to bed ... he still can't play the Sony's Playstation games all by himself, because of all those option menus and buttons. JAKK's games are much simpler, just a joystick and a button, any child older than 3 can play them.

JAKK is trading below 10 times earnings and it is a growing operation. Going global is the next step, as for example, Europe could and should account for roughly half of the company's sales, at least as much as the US, not just 5% of sales.

I'll keep holding JAKK for the long term.

Almost everybody is expecting soft spending in toys this year and that may, at least partially, explain why JAKK is so undervalued. Here's an article talking about this issue:

Harris poll indicates softer toy spending this year (http://www.marketwatch.com/news/story/poll-indicates-softer-toy-spending/story.aspx?guid=%7BAB0C80D6%2DF67D%2D43FB%2DA217%2D4B6127BEF2DB%7D&siteid=yhoof)

Almost, but not all ...

«Amazon.com  (AMZN) said it anticipates one of its strongest-ever holiday seasons for toy sales.

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=41979;image)

The image didn't come out right, but you can see the Eyeclops Bionic Eye is one of the favorites, and so is an Hannah Montana related product.

Well, JAKK was the Main's second best performer yesterday, and it still went down 1.8% :P

Anyway, I believe the general market hit the bottom and I expect it to slowly rise towards the end of the year (http://www.3stocksonfire.org/trading/index.php?topic=10600.msg108985#new).

I'll keep holding JAKK for the long term.

For this Thanksgiving I wanted to buy Wii for my kid and could not get it but got hold of nice Jakks Pacific PACMAN, heheheee. Nothing beats the ol' Pacman. Someday will compete with David for high score.

It was for $25 at Riteaid.

Quote from: stocky on November 24, 2007, 06:21:26 PM
For this Thanksgiving I wanted to buy Wii for my kid and could not get it but got hold of nice Jakks Pacific PACMAN, heheheee. Nothing beats the ol' Pacman. Someday will compete with David for high score.

It was for $25 at Riteaid.

Hehe, love that game. So far my high score is about 22,000 points ;D

Riteaid? That's interesting, I remember that company, it is a pharmaceutical retailer, isn't it? RAD has been tanking.

I bought mine for 30 € (about $45 ::)) on Continente, which is the Portuguese "Wal Mart".

Anyway, going back to JAKK, we've all been hearing that the Shopping season has been strong and I expect JAKK to benefit. It will surely beat its 2007 EPS guidance of $2.39 in my view. Longer term, even if consumer spending gets softer in the US, I don't think JAKK will be affected , because it sells very cheap products.

The stock is trading at roughly 10 times earnings and holding better than the general market lately.

I'll keep holding JAKK for the long term.

Yesterday I took my Plug It In & Play TV game to a dinner at my brother's house and everybody loved the game ... my brother said he was going to buy one for him too. I think I'll buy some of these games to give as Christmas presents. Anyway, this in itself sure isn't enough to consider JAKK an attractive holding, but it's a clue. You see, JAKK's products weren't available here in Portugal last year ... and they're getting some traction (of course, Portugal is a very small market, but it shows European trends) ... WWE action figures, also a novelty, are one of the top 3 choices for Portuguese boys this Christmas.

European sales were up 59% in Q3 2007 compared to Q3 2006, but still represent just 5.1% of JAKK's total sales, as opposed to 3.4% last year. I believe European sales can grow to become almost as large as the United States sales, which still represent 82% of JAKK's total sales, down from 87% last year.

International distribution alone can account for JAKK doubling its revenues and profits in my view.

I'll keep holding JAKK for the long term.

(note for stocky: my high score in Pacman jumped to 26,000 ;D)

Federal Lawsuit against JAKKS Pacific(R) by WWE to Be Dismissed
Sunday December 2, 8:10 pm ET


MALIBU, Calif.--(BUSINESS WIRE)--The Federal court has issued an order stating that it will dismiss the lawsuit against JAKKS Pacific, Inc. (NASDAQ:JAKK - News), its officers and other defendants in the federal lawsuit initiated by World Wrestling Entertainment, Inc. (WWE). The judge in the action captioned World Wrestling Entertainment, Inc. v. JAKKS Pacific, Inc., et al., 1:04-CV-08223-KMK in the U.S. District Court for the Southern District of New York, stated in his order that the Court "has determined that it will grant Defendants' motions to dismiss Plaintiff's Amended Complaint", and that a "comprehensive opinion" "will be issued in short order" in which "the reasons for this decision are explained in detail." The state court litigation among the parties remains pending.

Thanks for bringing us this relevant news for JAKK BigSully1:

• Jakks says WWE federal lawsuit to be rejected (http://us.rd.yahoo.com/finance/external/reuters/SIG=1165jh9eu/*http://www.reuters.com/legacyArticle?duid=mtfh81854_2007-12-03_09-45-30_n03386192_newsml&rpc=44&type=marketsNews)
at Reuters (Mon 4:45am)

This lawsuit was generally appointed as one of the main reasons why JAKK was so undervalued. The dismissal of the federal lawsuit should help JAKK's shares, even though the state lawsuit is still ongoing.

Anyway, as I've been writing throughout this thread, JAKK has been doing a wonderful job diversifying from the WWE action figures toys. It has a lot more toys in the market now than it had just a couple of years ago.

Perhaps this news can increase JAKK's P/E from the current 10 to perhaps 14? That would mean $35 per share, on my $2.5 2007 EPS estimate. Actually analysts have also raised their estimates and are at $2.48 EPS now:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=42230;image)

I believe 2008 estimates are too low, especially since the company is growing European sales at a 60% annual rate (and its products are a lot more expensive here than in the US, so I guess the profit margin is higher).

I'll keep holding JAKK for the long term.

JAKK released great news:

• Jakks Wins Round In Rumble With WWE (http://www.forbes.com/2007/12/03/jakks-wwe-lawsuit-markets-equity-cx_af_1203markets26.html?partner=yahootix)
at Forbes.com (Mon 4:00pm)

Also JAKK's press release says the following:

«... a "comprehensive opinion" "will be issued in short order" in which "the reasons for this decision are explained in detail." The state court litigation among the parties remains pending.»

Depending on the reasons we'll see if the state court litigation still has any legs or not.

The news was great, since JAKK has been undervalued for long probably due to this issue. But JAKK never leaves any gaps open, as the late July/early August "close the gap fury" demonstrates. So yesterday the stock came down to close the gap after the gap up at the open, rising just 5.3%, despite the relevancy of the news.

Longer term I can only see upside to JAKK and I'll keep holding.

JAKK is starting to make me sick. Remember what I said about the stock never leaving gaps open?

QuoteBut JAKK never leaves any gaps open, as the late July/early August "close the gap fury" demonstrates. So yesterday the stock came down to close the gap after the gap up at the open, rising just 5.3%, despite the relevancy of the news.

I just didn't notice another gap, to be closed at $24.53 ::)

Fundamental picture improved significantly with the dismissal of that federal lawsuit, yet the stock had to go down to close that stupid gap ... go figure. Well, stocks don't always respond to fundamental information over the short term. But over the long term value always comes up.

I'll keep holding JAKK for the long term.

QuoteFundamental picture improved significantly with the dismissal of that federal lawsuit, yet the stock had to go down to close that stupid gap ... go figure.

Well, the stupid gap is closed, now JAKK can go up as it should. $30 at the year's close isn't too much to ask.

Quote from: David Randolph on December 06, 2007, 07:20:46 AM

QuoteFundamental picture improved significantly with the dismissal of that federal lawsuit, yet the stock had to go down to close that stupid gap ... go figure.

Well, the stupid gap is closed, now JAKK can go up as it should. $30 at the year's close isn't too much to ask.

Hi David,

I mentioned this once before, but i think that the "lead" contamination of toys is a large issue here in the US. Almost every single day there is a new article or TV report on the dangers of lead in toys. Today there was a report that Home Depot sent an order of figurenes back to China due to Lead. Yesterday, there was this report:
" 35 percent of toys contain lead, report says
Testers bought most popular children's products at large retailers DETROIT - Tests on more than 1,200 children's products, most of them still on store shelves, found that 35 percent contain lead — many with levels far above the federal recall standard used for lead paint.

A Hannah Montana card game case, a Go Diego Go! backpack and Circo brand shoes were among the items with excessive lead levels in the tests performed by a coalition of environmental health groups across the country.
...Mattel Inc. recalled more than 21 million Chinese-made toys on fears they were tainted with lead paint and tiny magnets that children could accidentally swallow. Mattel's own tests on the toys found that they had lead levels up to 200 times the accepted limit.
...Easthope said 17 percent of the children's products tested had levels of lead above the 600 parts per million federal standard that would trigger a recall of lead paint.
...Among the toys that tested above that limit was a Hannah Montana Pop Star Card Game, whose case tested at 3,056 ppm.
..."There's a lot of doom and gloom about lead in the products — people only hear about the recalls," said Jeff Gearhart, the Ecology Center's campaign director. "Companies can make clean products. Our sampling shows that there's no reason to put lead in a product."
Link - http://www.msnbc.msn.com/id/22103641/
Other Links http://www.msnbc.msn.com/id/22008766/ - How to buy toys without a lot of worry

http://www.msnbc.msn.com/id/22041897/  - Hasbro ads to say it had no lead-paint recalls

I have seen the problem reported on local news, national news, talk shows, local paper, national papers and of course the Internet. "Kids" and "Danger" make great headlines and there have been many many such articles.

What is the impact of all of this bad news?
I have read some articles predicting lower toy sales, especially any thing made in China, but I do not have any evidence either way that this is happening.
Lower stock valuations due to fear of the unknown extent of the impacts are to be expected,  at least a short term.

I do have a position in JAKK, (good company) and hope that any bad news is already priced in, and that marketplace fears are overblown.       

QuoteI mentioned this once before, but i think that the "lead" contamination of toys is a large issue here in the US. Almost every single day there is a new article or TV report on the dangers of lead in toys.

I agree with you ravenquork. As I was watching CNBC the other day, they spent 10 minutes talking about the "dangers in toys". Then a toy industry analyst said that's not affecting sales.

QuoteI have seen the problem reported on local news, national news, talk shows, local paper, national papers and of course the Internet. "Kids" and "Danger" make great headlines and there have been many many such articles.

What is the impact of all of this bad news?
I have read some articles predicting lower toy sales, especially any thing made in China, but I do not have any evidence either way that this is happening.
Lower stock valuations due to fear of the unknown extent of the impacts are to be expected,  at least a short term.

You're right, all this media coverage on potentially "dangerous toys" is dampening toys company's valuation. I don't think the same is happening to their sales or profits, so it looks like a good buying opportunity.

In my mind and this issue is like saying: "coca-cola is bad for your kids. Or, "fast food is bad for your kids health, they'll get fat". I don't see anybody selling Coca-Cola or McDonalds due to this because the media's focus isn't there.

After the shopping season is over the media will turn to something else and leave the toy industry alone. Then investors will see that revenues and profits weren't affected, in fact they grew nicely, and will lift the cloud over JAKK and other toy companies.

JAKK has been dead money since I bought it back in April. I love the company and the stock, but if JAKK doesn't close above $35 until April 2008 I'll just give up and will replace it with another holding. I'm patient, but my patience has limits.

Hmm, just 9 people read yesterday's update on JAKK. I guess I'm wasting my time. Need to find something more interesting to do.

Anyway, JAKK released good news yesterday:

• Toys''R''Us and JAKKS Pacific(R) Team Up to Launch Pet Products at Toys''R''Us Stores Nationwide (http://biz.yahoo.com/bw/071212/20071212005360.html?.v=1)
Business Wire (Wed 5:00am)

JAKK has been diversifying its business and it is growing nicely. Yet the stock goes nowhere, and it has been that way for eight years. I'm holding for just about eight months, so I can say that I'm lucky.

JAKK should make a bullish breakout to new all time highs sometime in the first half of 2008. If that doesn't happen I'll just give up.

David,

You're not wasting your time, just doing a better job at getting us the info we need via the daily newsletter in the email box. Personally I look to my email then when I get the time I scan the threads. Keep up the great work please!

Brad

[/quote]

Quote from: David Randolph on December 13, 2007, 07:06:39 AM
Hmm, just 9 people read yesterday's update on JAKK. I guess I'm wasting my time. Need to find something more interesting to do.

David,

You're not wasting your time, just doing a better job at getting us the info we need via the daily newsletter in the email box. Personally I look to my email then when I get the time I scan the threads. Keep up the great work please!

Brad

David,

  I try to read most of your updates, especially on exciting stocks (the one's you never know what they'll do tomorrow). JAKK's been kind of boring. It loooks as if you can sell it, make a couple of trades, then return and pick it up from the freezer. Perhaps there is a reason why public is not moving JAKK up, may be even a silly reason, but this is the fact.

  Keep up the good work! I tell my friends and colleagues that I have the best financial adviser who lives in Portugal and helps me beat the market by far!

Berloga.

I agree Brad and Berloga.  I usually check the e-mail first and then go read each update.  I try to read every day, depends on how busy I am...

Thanks David.  I get concerned when I look at JAKK on a daily basis, look at a three year weekly chart and my concerns are less.  I'm still kind of baffled as to why the low multiple, maybe when the lawsuits completely disappear, the market will begin to value it higher.  I would have thought it would test the $30 range after the federal lawsuit was dropped.  Maybe its just a combination of recession fears, remaining lawsuit fears, and the hangover of the last quarter.

What I do know is how much my daughter and her friends like HM and I believe that holiday sales of HM stuff is going to be very good.

Kent

David, I agree with the above posters, I know each morning I look at your instructions email and I will read the updates when I have time.  Sometimes that isn't until the weekend!  I consider this a positive development in my trading development and in the development of 3SOF as I don't feel that i have to monitor the stock every day and watch every move.  Now, I can get your update, if I need to sell I have the information immediately, but if not I usually end up reading the updates every few days or on the weekends.  Keep up the great work, we all appreciate it! :)

Sumting is wrong with the sistem.
I am in the site 2-3 hour every day last 2 years, but tise website
give me:Total time logged in: 8 days, 20 hours and 38 minutes.
I am reading every day "last posts of David" and if I have time I am
going in ditales.
Your site is nice I love your comment and analyses.
Thank You
Be healthy David
GOGO

Hello David,
I agree with Trexkerry along with other posters.  I bought 12 of your 15 recommendation and without your post, my hand will not be as strong.   You have always said that you do not care if there is 1 or 1000's of members, you will continue researching and posting information for us.  Keep up the good work.  I enjoy reading your post.

Google most popular searches;

1) cheap gas prices
2) Hannah Montana
3) Webkinz ( what the hell is that?)

Webkinz is (according to my 6 year old daughter) is "an advanced animal love and care  center". :-) It works roughly like this, I buy her a Webkin (a small plush animal), she then goes to the Webkinz web site and registers it. She is alotted living space for her animal, creates her animals personal world and can communicate with other Webkinz users and animal lovers. Kids get hooked. I bought her a board game instead, she plays enough Disney games on line. :-)

Wow, I wasn't expecting so many posts inside JAKK's thread. Thanks a lot for your words of support and I'm glad that you don't feel the need to read the updates everyday. This way you have more time for your job and family.

Concerning JAKK, indeed, the stock has been boring for many years. For whatever reason, it doesn't rise. I mean, ToysrUs CEO went to CNBC and said on live television that anything related to Hannah Montana is the best selling toy for this Christmas. JAKK makes most of these toys and yet the stock didn't move at all. This is weird, but for now I'll keep attributing it to market inefficiency.

Yesterday there was a form 4 filed with the SEC (http://www.sec.gov/Archives/edgar/data/1009829/000114420407067845/xslF345X02/v097475_ex.xml) showing that Jack Friedman, JAKK's Chairman & CEO, sold 75,000 shares at $24.82 according to his Rule 10b5-1 Selling Plan. These were the last shares he had for sale:

«1. The sales reported hereby were made under a Rule 10b5-1 Selling Plan (the "Plan"), pursuant to which the Filer will be selling up to 150,000 shares of the Registrant's common stock, which sales, according to the Plan, are now completed.»

Jack still owns 518,897 shares, or about $12.56 M. He owns a lot more than we do, so you don't have to worry about his motivation to grow shareholders value.

Since Hannah Montana has been so hot and European distribution of JAKK's products is stronger in 2007 than in 2006 (for example, here in Portugal there were no JAKK's products last year, no WWE action figures and no Plug It In & Play TV Games - and for this Christmas I see them everywhere - I already bought two games and four action figures - trying to help ;D), I expect JAKK to beat the 4th quarter consensus expectations.

If this really happens and JAKK doesn't move above $30 ... well, I'll think about it then.

I'll keep holding JAKK for the long term.

QuoteSince Hannah Montana has been so hot and European distribution of JAKK's products is stronger in 2007 than in 2006 (for example, here in Portugal there were no JAKK's products last year, no WWE action figures and no Plug It In & Play TV Games - and for this Christmas I see them everywhere - I already bought two games and four action figures - trying to help Grin), I expect JAKK to beat the 4th quarter consensus expectations.

We just paid a visit to my mother-in-law and she still had a box there for my 4 year old son, Lucas. I knew what it was because I told her to buy him some WWE action figures. To my big disappointment (not my kid's), when he opened the box I saw tiny little action figures which had nothing to do with JAKK's products. I said "ohhhh, what is this, these aren't JAKK's toys" ... of course I quickly changed attitude or else Lucas would ask me "what's wrong with these action figures?"

Later when he wasn't looking, she told me: "I tried, but there weren't any WWE action figures available anywhere. They were sold out in every store several days before Christmas".

If the Portuguese market, albeit very small, is any indication of the broader European market, I'm sure JAKK will beat expectations in Q4 2007. And remember, they're selling the toys at much higher prices here in Europe than in the US, so profit margins are certainly higher too. For example, for the same Plug It In & Play TV Games that you can buy in the US for $19.9 I pay 30 euros, or about $43. The price here is more than double what it is in the US, and since the toys are produced and transported from China ... I believe the cost is about the same.

JAKK has been doing exceptionally well on an operating basis, and yet, the stock doesn't rise. I definitely expect a big positive surprise when the company reports the 4th quarter results ... if that doesn't make it rise anyway ... I guess I'll just read "One Up on Wall Street" chapter when Peter Lynch says one of the most common mistakes investors make is: "everything is right with the fundamentals, but the stock is taking too long to rise, I'll just sell it and buy another one". After taking this action, usually what happens is that the stock sold finally starts rising as fundamentals indicated, and the new "hot" stock bought enters a prolonged consolidation period or even goes down ???

I'll just patiently keep holding JAKK for the long term.

just fyi:
1)
Amazon Bestseller List Includes Kindle
Friday , December 21, 2007 08:52ET

Dec 21, 2007 (financialwire.net via COMTEX) -- December 21, 2007 (FinancialWire) As shipping deals wind down on Internet sales web retailer Amazon (NASDAQ: AMZN) maintains a list of some of the more popular holiday items.

Amazon's Kindle e-book reader is heavily promoted on the site, which refuses to allow third party vendors to sell it for higher prices. Other popular items include Jakks (NASDAQ: JAKK) Eyeclops Bionic Eye and Adobe's (NASDAQ: ADBE) Photoshop Elements. Nintendo's Wii is currently available through third party vendors for almost twice its $250 retail price. Amazon was enrolled in Investrend Research affiliate ValuEngine's professional analyst program. Complete information is available at the company's InvestorPower(tm) page, which is accessible from http://www.investrend.com/company/list.asp?sPathParam=yes

2)

JAKK: Needham Starts @ Hold
Friday , December 21, 2007 10:33ET
Issuer: JAKKS Pacific Inc (NasdaqNM: JAKK)
Analyst Firm:  Needham & Co.
Ratings Action: INITIATE
Current Rating: Hold

3)

JAKK: Short Interest UP 2.2% to 4.2M in Mid Dec 2007
Wednesday, December 26, 2007 16:18ET

According to new short interest data from NASDAQ, short interest for JAKKS Pacific Inc (NasdaqNM: JAKK) INCREASED 2.2% to 4,178,886 shares as reported in mid-December, 2007.
Based on JAKK's 20-day average daily share volume of 382,625, it would require approximately 11 day(s) of buying to cover this short interest.

QuoteJAKK: Short Interest UP 2.2% to 4.2M in Mid Dec 2007
Wednesday, December 26, 2007 16:18ET

According to new short interest data from NASDAQ, short interest for JAKKS Pacific Inc (NasdaqNM: JAKK) INCREASED 2.2% to 4,178,886 shares as reported in mid-December, 2007.
Based on JAKK's 20-day average daily share volume of 382,625, it would require approximately 11 day(s) of buying to cover this short interest.

Thanks for the info la-onda, I wonder why there are so many people short JAKK. I guess it is because of the media coverage of the recalls and "dangerous" toys ::)

I guess JAKK is trading at about 10 times earnings because investors expect its earnings to grow about 10% going forward. So the p/e resembles the growth rate, it makes sense. However, because of what I'm seeing in the main street, with expanding international sales and Hannah Montana's success, I believe JAKK will grow EPS by more than 10% in 2007 vs 2006.

JAKK made $2.30 EPS in 2006, so it needs to make at least $2.53 in 2007 to grow 10%. Analysts have been slowly raising their estimates for the full year of 2007, but they're still at $2.48:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=42878;image)

I expect JAKK to beat these estimates. By how much and the outlook to 2008 will tell us what to expect from this stock throughout the year.

Between now and mid February there's nothing else to do but to continue holding JAKK.

What is this, JAKK breaking down? It makes me sick, I feel like banging my head into the computer, it doesn't make any sense !!!

Wait, I have an explanation, which is a macro explanation and has nothing to do with JAKK's reality:

1) Because of the recalls and negative publicity, toy sales in general were and will continue to be weak;
2) Consumer spending in the US is and will be weak, and 82.3% of JAKK's revenues come from the US.

All I know is that Hannah Montana was sold out in major retailers in the US and man, if Americans are so poor now that they will cut on buying $10-$20 toys for their kids ... they need to learn how to fish and hunt for their survival ???

I'm sure that 4th quarter results for JAKK were above expectations, but I need to open my mind for being wrong about the long term outcome of this investment.

There are 4.2 million JAKK shares sold short, and part of this is non-sense related to the two reasons I've appointed. But it is possible that some part of it has to do with the long term and some people inside the industry knowing that WWE and JAKK will cease their collaboration in 2009, when the current agreement expires.

There was one sentence that made me feel a bit nervous:

«"The dismissal by the Federal Court of the action brought by WWE is a decisive legal victory for JAKKS and the other defendants. All of WWE's claims in the federal forum chosen, with great fanfare by WWE, including RICO, Robinson-Patman and Sherman Antitrust, have now been thrown out of court by a Federal judge. The Court is expected to render its comprehensive opinion by Friday and it remains to be seen how the opinion, which will address statute of limitations, injury and other issues, impacts WWE's state law claims. We eagerly await the Court's comprehensive decision," said Jack Friedman, Chairman and Chief Executive Officer, of JAKKS Pacific, Inc.»

These aren't the right words to say about a business partner, unless they are really angry at each other.

Oh my, I'll need to address the possibility of WWE dismissing JAKK as its partner in 2009 and the implications that will have on the fundamentals. But I'm not going to do it right away because I could get to an erroneous conclusion ... this is because I feel Hannah Montana may have sold more than WWE action figures in Q4, and that would completely change WWE's importance.

JAKK is breaking down but I'll keep holding at least until I get the 4th quarter results news and outlook for 2008.

JAKK finally showed some life today, closing back above the $21.54 level (which isn't technically significant anymore).

I maintain what I wrote in my latest update:

QuoteOh my, I'll need to address the possibility of WWE dismissing JAKK as its partner in 2009 and the implications that will have on the fundamentals. But I'm not going to do it right away because I could get to an erroneous conclusion ... this is because I feel Hannah Montana may have sold more than WWE action figures in Q4, and that would completely change WWE's importance.

JAKK is breaking down but I'll keep holding at least until I get the 4th quarter results news and outlook for 2008.

We may add the eyeclops bionic eye to Hannah Montana, as another contributor to diminish WWE's importance in JAKK's revenues and profits:

• JAKKS Pacific(R) Debuts the Next Generation of the Award-Winning EyeClops(TM) Bionic Eye at the Consumer Electronics Show and Hong Kong Toy Fair (http://biz.yahoo.com/prnews/080110/lath089.html?.v=101)
PR Newswire (Thu, Jan 10)

Anyway, I see that I was probably wrong when I downplayed the importance of the litigation between JAKK, WWE and THQ. Even if JAKK wins the case, which looks probable, it doesn't matter if WWE doesn't renew its agreement with JAKK in 2009.

But, before we give too much relevancy to this issue, I'm quite confident that the Q4 2007 earnings were above expectations and the 2008 outlook will be positive. It will be crucial to know if WWE's action figures were less relevant in JAKK's revenues and profits this quarter, though.

I'll continue holding JAKK.

I'm fully aware now that I made a mistake when evaluating JAKK and made it repeatedly for a long time. But a mistake is only a mistake if one doesn't learn something from it.

The "mistake" was: I thought JAKK was cheap because of its historical growth and profitability patterns, which were remarkably steady and predictable. However, there was a lawsuit from WWE putting a cloud on valuation and because of that the stock didn't rise, even as fundamentals kept improving. I downplayed the importance of the lawsuit because JAKK's CEO had a 25 year relationship with WWE and the issue looked like a very small one. Also I thought it was normal for two mid size companies to disagree on a few things and take them to court to be resolved, not impairing the long term relationship. It turns out that not always people make the rational choices and it seems there are personal issues around this lawsuit and people are really angry at each other. So now I believe that JAKK will lose its WWE business starting in 2009 and that will have a material negative effect on its operations.

The lesson was: lawsuits are important and I need to know what's going on thoroughly and understand the risks of an adverse conclusion. In JAKK's case, the company may even win the case (as it looks like it will), but it doesn't matter if it ends the relationship with WWE anyway.

The correction of the mistake: I need to know how much of a contribution to JAKK's revenues and profits in Q4 Hannah Montana represented and how much of them came from WWE related products. With this data I'll see the impact a definitive end of the relationship between JAKK and WWE will have starting in 2009, and will see if the stock is still attractive or not.

If not I'll sell it without hesitation.

For now I'll keep holding JAKK.

JAKK hit resistance, prior support at $23.31 and it went down about 1% yesterday as a result.

The 4th quarter 2007 results will be crucial for my buy/hold decision. I'm pretty sure that JAKK beat consensus estimates, but it is the composition of revenues that interests me.

For now I'll keep holding JAKK.

JAKK closed above the $23.31 resistance level on volume above average:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=43362;image)

Probably this was motivated by renewed interest in the toy industry after Mattel (MAT) reported its 4th quarter and full year 2007 earnings:

• Mattel profit grows 15%, tops forecasts, announces buyback (http://us.rd.yahoo.com/finance/external/cbsm/SIG=11iiumket/*http://www.marketwatch.com/News/Story/Story.aspx?guid=%7b1023A7C4-AFB2-4153-A13C-373EABCF87ED%7d&siteid=yhoo&dist=yhoo)
at MarketWatch (Thu 6:15am)

As a consequence of this MAT rose 11% on the session. Maybe the "recall" cloud will start lifting as better than expected results start rolling in, as I expected.

At yesterday's close, MAT trades at 13.6 times 2007 EPS. JAKK trades at 9.5 times 2007 EPS analysts estimates (http://finance.yahoo.com/q/ae?s=JAKK), which I believe the company will beat.

The problem is this discount valuation might be justifiable if JAKK misses WWE in 2009. But this still isn't the time to consider this issue, but just after the upcoming earnings release, conference call and 10-K form, where the company will disclose all the risks and informations regarding the trial with WWE.

In the meantime I'll keep holding JAKK.

JAKK closed back above the 50 days SMA and Hannah Montana continues to break records:

'Hannah' Holds Box-Office Sway With $29M (http://money.cnn.com/news/newsfeeds/articles/apwire/b796858dcc6e0227425ab38a1850534d.htm)

I don't think that Hannah's level of popularity is embedded in JAKK's revenue and EPS estimates for 2007 and 2008.

And JAKK has been making great products without even telling us, the investors, check this out:

JAKKS Pacific Hannah Montana Plug and Play TV Game (http://reviews.pricegrabber.com/electronics/m/50292348/)

Maybe management just got tired of sending out positive press releases without any effect in the share price ???

After MAT's earnings I'm more confident than ever that JAKK will beat the 2007 analysts estimates and I'm eager for their 2008 projections and furthermore to know about the shape of JAKK's relationship with WWE.

I'll keep holding JAKK.

JAKK will release 4th quarter and full year 2007 results on February 20:

• JAKKS Pacific to Announce Results for Fourth Quarter and Year Ended December 31, 2007 (http://biz.yahoo.com/bw/080204/20080204005536.html?.v=1)
Business Wire (Mon, Feb 4)

I'll keep holding JAKK.

JAKK showed unusual strength yesterday, climbing above the 50 days SMA on volume above average.

Results will be released February 20 and I expect them to be above expectations.

This is significant news for JAKK:

Jakks reaches licensing pact with WWE rival TNA (http://www.reuters.com/article/marketsNews/idUSWNAS077520080213?rpc=44)

WWE switched JAKK for Mattel, which isn't good. JAKK signed an alternative agreement with WWE's rival TNA.

The market isn't enjoying this, since JAKK is down 5% plus in the pre-market. But this development was expected ever since JAKK's CEO said those harsh words after winning the Federal case between JAKK and WWE.

This was the explanation to why JAKK trades at 9 times earnings, while the Toy industry trades at 16 times earnings.

I still need to study more about TNA and I'm sick today, I just got out of bed when I saw the "news flash" on JAKK.

But at first sight this a major worry that gets resolved, out of the way. Perhaps the stock will claw back up after the lower open to finish higher on the day. The 1.4 million shares traded yesterday pushing the stock up 8.5% didn't do it for nothing.

I remain an optimist on JAKK's future and I'll keep holding the stock whatever happens today.

On a positive note here is what the CEO said about the switch from WWE to TNA, that will not occur anyway until 2010;

"By the time 2010 arrives, TNA should be able to increase its market share even more significantly," Jakks Chief Executive Jack Friedman said in a statement.
-------------------------------------------------------

Quote from: BigSully1 on February 13, 2008, 11:43:44 AM
On a positive note here is what the CEO said about the switch from WWE to TNA, that will not occur anyway until 2010;

"By the time 2010 arrives, TNA should be able to increase its market share even more significantly," Jakks Chief Executive Jack Friedman said in a statement.
-------------------------------------------------------

Yep, the market reaction to the news wasn't all that bad, with JAKK down 2.7% on the day after opening down 6.3%.

There were two main negatives about yesterday's news, one that was expected and another one that maybe still wasn't factored in.

The expected one was that WWE and JAKK won't renew their collaboration agreement after 2009. Since this was expected, it should also be expected that WWE wouldn't want to lose revenues coming from wrestling action figures. But, and this is the real bad part of the news, WWE settled an agreement with the World's largest toy company, Mattel (http://biz.yahoo.com/bw/080213/20080213005111.html?.v=1), which is more than 10 times bigger than JAKK.

So, not only JAKK loses WWE, it will also face tough competition from MAT in the wrestling action figures market.

The good part of the news which I believe also wasn't priced in, is that JAKK won't lose all its wrestling action figures business because it signed an agreement with TNA (http://biz.yahoo.com/bizj/080213/1590496.html?.v=1), which is an alternative wrestling company to WWE.

I wonder what will be the impact of all this on JAKK's operations and long term value. Unfortunately JAKK doesn't disclose sales in terms of product categories, but WWE does and this is what they have on the 4th quarter earnings press release:

«Licensing revenues were $9.4 million as compared to $6.3 million in the prior year quarter, primarily reflecting increases in apparel, toy, and novelty related sales of 128%, 48%, and 161%, respectively.»

Hmmm, they say revenue coming from toys rose 48%, this is another indication that JAKK will beat the 4th quarter consensus estimate. Anyway, $9.4 M for apparel, toy and novelty related sales per quarter isn't much. It wouldn't be significant for JAKK, which sells about $800 M a year. But, no doubt JAKK has a much larger share of the pie when it sells a WWE action figure than WWE does, and probably that was the main factor which lead WWE to switch from JAKK to MAT.

I'll have to keep studying the situation, but as it is now I consider that JAKK has other much more promising products than wrestling action figures (like Hannah Montana related products and Plug it & Play TV games, for example) and these should make it continue to grow.

I still feel that that the resolution of this JAKK vs WWE story is a relief for investors. The stock has been clouded by this story for several years and perhaps now that it is over the sun may shine again.

I'll continue holding JAKK.

I feel bad about this, but I'm changing my mind about JAKK. Here are the two main reasons:

1) JAKK will have MAT's competition in the wrestling action figures market starting in 2010;

2) Hannah Montana probably delivered very strong sales in Q4 2007, but someone opened my eyes when saying: "That won't be there over the long term, because Miley Ray Cyrus (http://en.wikipedia.org/wiki/Miley_Cyrus) is a real girl and she'll get older and her show will lose momentum and end. So, 5 years from now when she's an adult kids won't buy her dolls".

It's so obvious, I wonder why didn't I see it before ::)

Without WWE and without Hannah Montana, what's JAKK's long term value? I don't know but there are significant risks.

But since JAKK will release earnings next Wednesday and I'm pretty sure they'll be way above expectations I'll wait for the positive news before selling.

So much time for nothing, it's a pity, but it could be worse.

Good decision, David. JAKK does not offer a clear path to a significant growth which you typically look for. A good call to sell after the earnings are out.

Hi David I know you are man of reasoning convictions and a "stronghander"... but take a look to the following article

I did something wrong folks please forgive me

JAKKS Pacific(R) Presents a Powerhouse Portfolio of Interactive Toys and Games at the 2008 American International Toy Fair

Business Editors/Toy Industry Writers
     
MALIBU, Calif.--(BUSINESS WIRE)--February 18, 2008--JAKKS Pacific, Inc.
(NASDAQ:JAKK) is presenting the company`s line-up of interactive toys and
games to media and buyers attending the American International Toy Fair held in
New York City, February 17th-20th. The 2008 electronic toy portfolio from JAKKS
Pacific ® features products for every level of gamer and tech gadget
enthusiast, including smart AND fun interactive learning products based on the
Discovery Kids ® brand. It features new expansions of the JAKKS Plug It In &
Play " TV Games " line with the Ulti-Motion "wireless motion gaming system,
conceptualized in collaboration with Disney ®, and Disney Channel`s Hannah
Montana " G2: Game Girl "deluxe plug and play game. JAKKS " will also debutits
EyeClops " Night Vision Goggles and BioniCam ", two extensions of its
award-winning EyeClops " Bionic Eye toy, which was nominated for Most
Innovative and Best Educational Toys of 2007 by the Toy Industry Association.
     
"We are excited about the potential for our 2008 interactive portfolio and
believe it will appeal to many different consumer groups, ranging from
preschoolers to boys, tween girls, adults and everyone in between", said
Stephen Berman, President and COO, JAKKS Pacific. "We continue to focus on
traditional play patterns intertwined with new technology to make them engaging
to today`s kids. Our next generation EyeClops BioniCam features portability, a
multi-zoom lens and recordable features allowing kids to capture and save their
finds on a USB key. The new EyeClops Night Vision Goggles are so cool that
practically everyone out there might want a pair"
     
"With our new Ulti-Motion game system, several titles of which were
conceptualized with Disney Consumer Products, we combine the hugely popular
motion gaming category with plug and play gaming and toyetic role play
accessories especially designed for preschoolers and girls. The G2: Game Girl
line takes our TV Games line to the next level with rich graphics and sounds,
tween-centric gameplay, and popular entertainment properties such as Disney` s
Hannah Montana and High School Musical ".
     
EyeClops" Night Vision and Bionic Cam "
     
The Toy Wishes Toy Awards favorite Tech Toy of 2007, EyeClops " Bionic Eye toy
also topped many retailer and media Best Toy and Holiday Gift lists in 2007.
EyeClops " Night Vision Infrared Stealth Goggles " providesan authentic night
vision experience powered by actual infrared driven night vision technology.
The EyeClops Night Vision goggles allow visibility up to 20 feet in completely
dark environments. SRP $79.99, available for Fall 2008.
     
The EyeClops " BioniCam" toy boasts several exciting new features - a
multi-zoom lens for 100x, 200x or 400x magnification, a color LCD screen, and
clip-on battery pack for portability. It even features a built-in camera and
flash drive which captures images and video and can upload them to a computer
with the included USB key to be printed, emailed, posted and shared. The
EyeClops BioniCam toy can still be plugged into the A/V jacks of any standard
television, to display discoveries right on the TV. SRP $79.99 expected to be
available for Fall 2008.
     
Ulti-Motion"
     
Ulti-Motion game systems are a new video game concept developed in conjunction
with Disney Consumer Products which takes the fun and creativity of interactive
play to the next level in a way only Disney can. The new Ulti-Motion" video
game line expands upon JAKKS Pacific`s award-winning Plug It In & Play TV
Games technology by combining toys and role play with one of the most popular
trends in video gaming: motion games. The Ulti-Motion game system plugs
directly into the A/V jacks of any standard TV, and it contains a number of
games or activities along with role play accessories. No additional cartridges
are needed.
     
The Ulti-Motion " Disney ®line delivers on Disney s preschool brand values
including education, adventure, music, art and exploration and will feature hit
Playhouse Disney " properties. Titles especially developed for girls inspired
by Disney Princess " and Disney Fairies " will also be introduced this Fall.
     
Also slated for launch this Fall is the JAKKS Ulti-Motion " Swing Zone "line,
featuring an all star, multi-sport title including bowling, tennis, golf,
baseball and football.
     
G2: Game Girl" TV Games
     
G2: Game Girl " TV Games is a gaming experience designed especially for tween
girls featuring the most popular entertainment properties, rich graphics &
sounds and a tween-centric gameplay that provides girls with games that are
both realistic and inspirational. Driven by the proven, award-winning Plug It
In & Play technology from JAKKS (compatible with any standard television and no
video game console needed), G2: Game Girl "TV Games boasts high resolution
graphics, rich sound and deep gameplay. The sleek, stylish design of the
controller and console will look cool in any tween girl s bedroom. The new
line is inspired by Disney`s hottest tween brands including Hannah Montana "
and High School Musical " and it was designed in collaboration with Disney
Consumer Products.
     
With G2: Game Girl, girls can play and hang out with their favorite teen
characters, Hannah Montana and the cast of High School Musical! With G2: "Game
Girl  Hannah Montana and "G2: Game Girl " High School Musical girls can
experience firsthand all the fun and drama of the not-so-average teens. With
great graphics, hit tunes and gameplay that`s both relatable and aspirational
for tweens G2: Game Girl truly delivers. The new G2: Game Girl TV Games will
be available in Fall 2008 for a suggested retail price of $49.99.
     
Neopets
     
JAKKS is launching a full line-up of collectible plush, mini figures, playsets
and activities with an interactive online component and based on the expansive
virtual world of Neopets ®, and its extraordinary characters, found at
www.neopets.com. The JAKKS " product line brings the online experience of
Neopets, the world`s orginal youth-targeted virtual world, to the real world
with a focus on collectible plush toys that tie-in to the extensive variety of
Neopets species and characters featured throughout the world of Neopia.
     
Discovery Kids
     
The new line of JAKKS products based on the Discovery Kids brand and values,
which is expected to be available for Fall 2008, will encourage kids to explore
nature, learn about science and technology, develop life skills and expand
their creativity and imagination in fun, meaningful ways.
     
The line includes Discovery KidsSmart Animals " toys that make learning about
animals fun! Each 3-inch animal figure features real-feel skin, sculpted
footprints and a Discovery Kids logo housing a hidden barcode. Kids can
activate the figures with the Discovery Kids Smart Animal Scanopedia (sold
separately) for special effects, to reveal facts unique to each animal. It even
quizzes kids on their knowledge of animals! The Smart Animal Scanopedia is an
electronic animal encyclopedia that not only scans any Discovery Kids Smart
Animal figure, but can also be used on its own to reveal a world of information
about animals, maps and other fun activities. Suggested retail price of $29.99
for Scanopedia & $4.99 , $12.99 for Smart Animal figure packs sold separately.
     
JAKKS 2008 Interactive line-up is available for media to preview at JAKKS
Pacific`s new New York City showroom by appointments only. Please contact
[email protected] for more information.
     
About JAKKS Pacific, Inc.
     
JAKKS Pacific, Inc. (NASDAQ:JAKK) is a multi-brand company that designs and
markets a broad range of toys and consumer products. The product categories
include: Action Figures, Art Activity Kits, Stationery, Writing Instruments,
Performance Kites, Water Toys, Sports Activity Toys, Vehicles,
Infant/Pre-School, Plush, Construction Toys, Electronics, Dolls, Dress-Up, Role
Play, and Pet Toys and Accessories. The products are sold under various brand
names including JAKKS Pacific ®, Play Along ®, Flying Colors ®, Creative
Designs International ", Road Champs ®, Child Guidance ®, Pentech ®,
Trendmasters ®, Toymax ®, Funnoodle ®, Go Fly a Kite ®, Color Workshop ®, JAKKS
Pets " and Plug It In & Play TV Games ". JAKKS and THQ Inc. participate in a
joint venture that has worldwide rights to publish and market World Wrestling
Entertainment video games. For further information, visit www.jakks.com.
     
This press release may contain forward-looking statements (within the meaning
of the Private Securities Litigation Reform Act of 1995) that are based on
current expectations, estimates and projections about JAKKS Pacific's business
based partly on assumptions made by its management.These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict.Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
statements due to numerous factors, including, but not limited to, those
described above,changes in demand for JAKKS' products, product mix, the timing
of customer orders and deliveries, the impact of competitive products and
pricing, and difficulties with integrating acquired businesses.The
forward-looking statements contained herein speak only as of the date on which
they are made, and JAKKS undertakes no obligation to update any of them to
reflect events or circumstances after the date of this release. © JAKKS
Pacific, Inc. All Rights Reserved.
     
© JAKKS Pacific, Inc. All rights reserved.
               
JAKKS Pacific, Inc.
Genna Rosenberg, 310-455-6235
[email protected]
or
Anne-Marie Feliciano, 310-455-6245
[email protected]

Quote from: berloga on February 15, 2008, 09:38:55 AM
Good decision, David. JAKK does not offer a clear path to a significant growth which you typically look for. A good call to sell after the earnings are out.

Thanks berloga, but as Rmagos wrote ...

Quote from: Rmagos on February 18, 2008, 05:58:56 PM
Hi David I know you are man of reasoning convictions and a "stronghander"... but take a look to the following article:

• JAKKS Pacific(R) Presents a Powerhouse Portfolio of Interactive Toys and Games at the 2008 American International Toy Fair (http://biz.yahoo.com/bw/080218/20080218005188.html?.v=1)
Business Wire (Mon 6:00am)

... there are some really terrific toys there. I especially like this one:

«EyeClops™ Night Vision Infrared Stealth Goggles™ provides an authentic night vision experience powered by actual infrared driven night vision technology. The EyeClops Night Vision goggles allow visibility up to 20 feet in completely dark environments. SRP $79.99, available for Fall 2008.»

This will sell a lot, no doubt about it. Awesome product.

Perhaps the article above is what has been moving JAKK up so strongly, despite the very bad news coming out from WWE/MAT.

I'm undecided again, I guess tomorrow's earnings and conference call will help me decide!

For now I'll keep holding JAKK.

JAKK beat it by a wide margin:

• JAKKS Pacific(R) Reports Fourth Quarter and Year-End Results for 2007 (http://biz.yahoo.com/bw/080220/20080220005452.html?.v=1)
Business Wire (Wed 3:15am)

Everybody is pounding the table on it this morning:

• UPDATE - Jakks Pacific posts sharply higher Q4 profit (http://us.rd.yahoo.com/finance/external/reuters/SIG=1165jh9eu/*http://www.reuters.com/legacyArticle?duid=mtfh08275_2008-02-20_08-21-54_n20304541_newsml&rpc=44&type=marketsNews)
at Reuters (Wed 3:21am)

• InPlay: JAKKS Pacific beats by $0.32, beats on revs; board announces $30 mln share repurchase program (http://finance.yahoo.com/mp#jakk)
Briefing.com (Wed 4:15am)

• Jakks Pacific 4th-quarter net up 48%, sales up 20% (http://us.rd.yahoo.com/finance/external/cbsm/SIG=11iiumket/*http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bC519924B-8BF0-48B2-9C92-ABE1100B89A2%7d&siteid=yhoo&dist=yhoo)
at MarketWatch (Wed 5:30am)

With $2.8 EPS JAKK is trading at about 9 times trailing earnings (it will probably open around $28 for 10 times earnings). EPS growth from a year ago level was 22%, but it accelerated to 45% in the 4th quarter. The Toy industry trades at an average of 16 times earnings (http://finance.yahoo.com/q/co?s=JAKK) and the industry's revenue has been growing about 4.4% (so, less than JAKK).

Let me make a quick comparison between JAKK and MAT, which is the largest Toy company in the World:

Market Cap: JAKK is $758 M, MAT is $7.5 B;
2007 Revenue and Price to Sales Ratio: JAKK's revenue was $857.1 M (PSR = 0.88), MAT's was $5.97 B (PSR = 1.26);
2007 Revenue Growth: JAKK's was 12%, MAT's was 5.7%;
2007 EPS and Price Earnings Ratio: JAKK's was $2.8 (PER = 9.6), MAT's was $1.54 (PER = 13.3)
2007 Net Profit Margin: JAKK's was 10.5%, MAT's was 10%
2007 vs 2006 EPS growth: JAKK's was 45%, MAT's was 0.6%

From this comparison it is obvious that JAKK is deeply undervalued when compared to the industry leader.

Of course, there's a reason for this: for years JAKK had been plagued by the WWE lawsuit, which has come to a resolution in practical terms. JAKK's management has been doing an excellent job to diminish its dependence on WWE's products and I think the strategy has been working.

Hannah Montana won't last 10 years (probably no more than 3), but JAKK's management has been showing the capacity to innovate and create new and very appealing products, like the infra-red Goggles, for example. I also truly enjoy the Plug it and Play TV games.

JAKK's guidance wasn't very optimistic which shows how management learned from past mistakes, when they disappointed investors. They're much more cautious now and prefer to positively surprise people.

The pendulum is bouncing for the HOLD decision again. I'll still listen to the conference call, but as it is now JAKK is worth $35 at the very minimum and I'm not selling it for $28 today.

I'll hold JAKK!

I thought JAKK's reaction to spectacular earnings yesterday wasn't all that special and wondered why. Listening to the conference call and some breakdown by product categories I understand the market reaction better and unfortunately I'm going to have to sell JAKK around today's open.

Here's why:

I "knew" JAKK was going to beat the 4th quarter consensus EPS estimate of $0.75. My expectation was correct, since the actual number came in at $1.06. But I was just lucky ... you see, I had this expectation because I thought Hannah Montana related products would be a bigger than expected contributor to net income. But in fact $18 M of the $34.4 M net income for the quarter came from the partnership with THQ to develop WWE video games.

So, of the $1.06 EPS, $0.55 came from THQ. Without this, EPS would have been $0.51, which would be way below expectations.

Moreover, THQ's net income came from the big game they released, Smack vs Raw or something like that. JAKK's management expects revenue coming from the THQ partnership to be down 20% in 2008. More worrisome to me is that I don't expect this revenue source (which is almost all clean profit) to be there over the long term, since WWE clearly doesn't want more business with JAKK (it handed over part of the business to Mattel already, with the contract starting in 2010).

The conclusions of all this is that JAKK is a SELL here at $28. Of course I'll keep it in the Watch List for a potential future re-entry.

Trading Plan:

SELL JAKK.

I did well in selling JAKK for the reasons I've sold (at $29.15), but they were so conclusive that I should have sold the stock short just before today's earnings release:

Jakks Pacific profit slips 73% (http://us.rd.yahoo.com/finance/external/cbsm/SIG=11iiumket/*http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bF93BD6CE-6380-407D-8887-C27E4C0BBE6A%7d&siteid=yhoo&dist=yhoo)
at MarketWatch (Wed 6:41am)

The stock is down 11.5% in the pre-market. Anyway, I'm glad that at least I'm not holding this one right now.

David,  Good call on this one.  I was never in it, did not like the sector.  Hope all is going well with you.  Good health and trading.

Poli