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A New York hedge fund is betting big against Nintendo


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https://www.bloomberg.com/news/articles/2018-07-30/sac-alum-plotkin-makes-a-massive-short-bet-against-nintendo

 

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Plotkin’s fund was short 1.2 million shares, or about 0.8 percent of Nintendo’s outstanding stock, according to the latest filing with the Tokyo Stock Exchange. It’s the largest such trade against the company since at least 2013, according to Bloomberg data. The hedge fund has been steadily increasing its position, with the latest trade on July 26, ahead of Nintendo’s quarterly earnings announcement on Tuesday.

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Nintendo will report first quarter earnings on Tuesday after the market close. Analysts estimate revenue will rise 21 percent from a year earlier, while operating profit will jump 58 percent.

 

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Hardware Q1:
2017 - 1.97m
2018 - 1.88m

Software Q1:
2017 - 8.14m
2018 - 17.96m

 

ITD:

Odyssey
11.17m (+ 760k)
Mario Kart 8 Deluxe
10.35m (+ 1.13m)
Zelda BOTW
9.32m (+ 840k)
Splatoon 2
6.76m (+ 740k)
1-2 Switch
2.45m (+ 160k)
ARMS
2.01m (+ 160k)
Kirby
1.89m (+ 630k)
Xenoblade 2
1.42m (+ 110k)
Labo
1.39m combined
DK: TF

1.40 million

 

 

 

 

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I wouldn't bet against a Pokemon game coming out for the holiday season. It doesn't matter if the game is good or not, it's going to sell consoles and those consoles will need more software.

 

I suppose this makes sense is if these guys think Nintendo is going to miss their own targets. I'm not a financial analyst or anything, but I've seen Apple's stock drop after record quarters because they didn't sufficiently beat market expectations. 

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1 hour ago, AndrewDean84 said:

It'd shock most of the industry, since its hardware sales and software sales are knocking it out of the park. 

 

4m1WzP5.png

 

https://www.nintendo.co.jp/ir/en/finance/hard_soft/index.html

I’m aware of the sales. The biggest thing the Switch has going for it at this point is that 3rd parties and indies have taken it seriously. But I don’t trust Nintendo to maintain a good thing. I’m not convinced they understand why people like the Switch yet, their online service is stuck in 1997, and I don’t trust their software output. 

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5 hours ago, JosephManderley said:

As I type this, Nintendo's shares are up over 6%.  I think the hedge fund has shit the bed on this one.... :jordan:

 

Nah, they've made it out alright based on the timing of their position:

 

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Plotkin is still likely in-the-money on his short bet. The average price of his position is probably around 41,000 yen to 42,000 yen, according to regulatory disclosures and Bloomberg calculations that assume he began short selling in early May. That’s still higher than Wednesday’s intraday price of 39,330 yen, despite the day’s rally.

 

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