JAKK

[ravenquork]

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, 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.       

[David Randolph]

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.

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.

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.

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.

[David Randolph]

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
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.

[basanlas]

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

[basanlas]

[/quote]

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

[berloga]

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.

[JKN]

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

[trexkerry]

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!

[GOGO]

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

[tri-iam]

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.

[BigSully1]

Google most popular searches;

1) cheap gas prices
2) Hannah Montana
3) Webkinz ( what the hell is that?)

[berloga]

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. :-)

[David Randolph]

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 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 ), 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.

[David Randolph]

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 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.

[la-onda]

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.