Crossroads Capital LLC, an investment management company released its third quarter 2024 investor letter. A copy of the same can be downloaded here. The Crossroads Capital Investment Partners, LP returned 4.2% net of all fees and expenses, bringing YTD net returns to 8.9%. The fund has compounded at 15.7% and 17.9% net, respectively, since inception, and over the last five years. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Crossroads Capital highlighted stocks like Nintendo Co., Ltd. (OTC:NTDOY) in the third quarter 2024 investor letter. Nintendo Co., Ltd. (OTC:NTDOY) develops, manufactures, and sells home entertainment products. The one-month return of Nintendo Co., Ltd. (OTC:NTDOY) was 16.28%, and its shares gained 27.26% of their value over the last 52 weeks. On December 17, 2024, Nintendo Co., Ltd. (OTC:NTDOY) stock closed at $15.36 per share with a market capitalization of $71.693 billion.
Crossroads Capital stated the following regarding Nintendo Co., Ltd. (OTC:NTDOY) in its Q3 2024 investor letter:
“Our thesis on Nintendo Co., Ltd. (OTC:NTDOY), the Godzilla of video gaming, is quite simple. Armed with its Apple-like iterative hardware model and software-based ecosystem, as well as a growing active player base and ever-increasing digital sales, the company should generate substantial earnings growth that is de-coupled from the past “boom-bust” console cycles it previously underwent. Additionally, its historically under-monetized IP continues to shine, getting new life in a rapidly expanding number of movies, theme parks, retail stores, general merchandise, and (we strongly suspect) a whole new crop of perpetual live service games in the years ahead.
Better yet, with the debut of the Switch 2 early next year, the company is embarking on a new era which should see massive and consistent growth that the market continues to miss. The release of the Switch 2 will open the Nintendo ecosystem to third-party AAA games like Call of Duty and an entirely new cohort of higher-spending gamers. And that’s just one driver of returns. The global blockbuster Super Mario movie has the company embarking on the next leg of its journey in visual content, i.e., a multi-film, very Marvel-like “Nintendo Cinematic Universe,” with the company aiming to build up to a one-movie-per-year pace over the next five years. New movies for Mario, Zelda, and others are in development. And the company’s venues at Universal Parks continue to gain traction, with Japan and LA locations already open, Orlando opening in May next year and Singapore following shortly thereafter. We could go on, but the setup is now perhaps more attractive that it’s been at any time since we initially got involved all the way back in Q4 of 2018.
Finally, we anticipate strong Switch 2 sales starting in early 2025, alongside an impressive lineup of first- and third-party software and higher prices for NSO and all AAA games sold on Nintendo’s App Store-like eShop platform. As a result, we should see a step change increase in its earnings power in the coming years unlike anything we’ve seen to date. It’s safe to say that a console release of this importance, plus spring-loaded game sales and a modest valuation of only 10x P/E (less cash) puts Nintendo’s forward risk-adjusted return profile into rarified air over the next three to five years. We’ve got a lot more to say in our Q4 letter given what’s unfolded since the end of the quarter but for now, rest assured Nintendo’s best days remain firmly ahead.”
A close up of a person’s hands using a home console gaming device.
Nintendo Co., Ltd. (OTC:NTDOY) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 1 hedge fund portfolios held Nintendo Co., Ltd. (OTC:NTDOY) at the end of the third quarter which was 1 in the previous quarter. While we acknowledge the potential of Nintendo Co., Ltd. (OTC:NTDOY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.