In this article, we discuss the 5 best stocks to buy according to billionaire Mason Hawkins. For Hawkins’ investment philosophy and his comments on certain stocks, please see 10 Best Stocks to Buy According to Billionaire Mason Hawkins.
5. Mattel, Inc. (NASDAQ: MAT)
Value: $303,931,000
Percent of Mason Hawkins’ 13F Portfolio: 6.8%
Number of Hedge Fund Holders: 25
Ranking 5th on the list of 10 best stocks to buy according to billionaire Mason Hawkins is Mattel, Inc. The California-based toy manufacturer owns renowned brands such as Barbie, Hot Wheels, and Thomas & Friends. In 2020, Barbie’s brand gross sales amounted to $1.35 billion, increasing by $1.16 billion from 2019. During the COVID-19 pandemic, 30% of MAT’s retail stores shut down, affecting their overall revenue performance. However, the company was quick to recover with e-commerce as a platform to reach their audience. Evidently, in the third quarter of 2020, online sales rose 50% compared to the same period of 2019.
The company has a market cap of $7.15 billion and a revenue of $4.58 billion in 2020. Shares of MAT surged 123% over the past twelve months. Southeastern Asset Management currently owns 17.4 million shares of MAT, worth $30 million. Mattel, Inc. occupies 6.8% of Southeastern Asset Management’s overall equity. Hedge fund interest in Mattel, Inc. fell at the end of last quarter. The number of long hedge fund bets declined by one lately. Mattel, Inc. was in 25 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to 26 positions in the previous quarter.
Longleaf Partners Fund mentioned that in March, MAT responded to store closures by successfully pivoting to e-commerce sales in its Q4 2020 investor letter:
“Mattel (29%, 2.04%; 49%, 3.15%), the global toy and media company, was also a top performer for the year as well as for the quarter. The company’s third quarter was excellent across the board. Barbie’s resurgence continued with 30% growth, leading consolidated Mattel revenues up 10%. Gross margins expanded by 400 basis points, and the quarter’s EBITDA came in remarkably high at $470 million (for an $8.6 billion EV company), partially due to shifting advertising spending back towards the end of the year. Mattel typically earns all its annual profit during the fourth quarter holiday rush, and we expect another excellent sequential performance to result in over $100 million FCF for the year. CEO Ynon Kreiz has delivered extraordinary improvements to revenues, expenses and culture since he took over in 2018. This year the company reacted to store closures in March with a successful quick pivot towards e-commerce sales. Mattel has also continued to build out its intellectual property assets with 10 feature films under development, as well as over 25 TV projects and video games. These high-margin projects have not yet begun to boost the company’s financial results and should prove transformative over the next several years. In the COVID environment, Mattel worked to manufacture PPE for donation to medical professionals and launched a “Thank You Heroes” collection with all net proceeds being donated to First Responders First. The company gave grants to Feed the Children and Save the Children and donated art supplies, games and toys to students in need.”
