There’s a new villain in the world of Nintendo Co.
Gabriel Plotkin, head of New York hedge fund Melvin Capital Management, has accumulated a $375 million short bet against the Japanese game maker, according to regulatory filings. The former star trader at SAC Capital Advisors accounted for as much as 7 percent of Nintendo’s daily volume in recent weeks, contributing to stock declines since May that have stunned analysts.
Investors have been baffled by the sudden swoon and Plotkin’s position may add to their concerns. The stock’s poor performance has dominated coverage in the financial and gaming press, and discussions on social media, with questions raised about whether long-term shareholders are losing faith in the outlook for the Switch game console. Shares fell as much as 27 percent from their peak in May.
“With Nintendo, there were too many longs and now they’ve exited and started shorting the stock as well,” said Atul Goyal, an analyst at Jefferies Group.“The flows have changed.”
Plotkin’s fund was short 1.1 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 until last week, though it trimmed slightly on July 24.
Read More: Nintendo Seeks Next Level in 130-Year-Long Quest to Stay Alive
Plotkin started his firm in December 2014 with the blessing and financial support from Steven A. Cohen, the controversial founder of SAC Capital. In 2015, Plotkin’s first full year in business, Melvin Capital returned 47 percent, putting him at No. 2 on Bloomberg’s global ranking of the top 50 hedge funds with more than $1 billion in assets. It has maintained that strong pace in recent years through bullish bets on Amazon.com Inc. and Netflix Inc.
Melvin Capital, which has about $7 billion in assets, would not explain its thesis for shorting Nintendo, with Plotkin and Chief Operating Officer David Kurd declining multiple requests for comment. The hedge fund employs a "bottom-up, fundamental" process for identifying stocks to buy and short, according to U.S. regulatory filings. It focuses on consumer companies and owned about 70 stocks including Electronic Arts Inc. and Twitter Inc., according to the latest filing in May.
The downward pressure on Nintendo shares has sowed confusion among executives, investors and analysts. The Switch became one of the fastest-selling consoles in history after its release last year, quintupling the company’s annual operating profit. Many analysts were bewildered when shares began dropping sharply in May, leading to the biggest gap in a decade between brokerage targets and the actual stock price. Goyal called the declines “shocking” at the time.
Nintendo shares closed at 37,900 yen Friday, down 8 percent for the year.
The chaos peaked in June during the Electronic Entertainment Expo (E3), when shares plunged 11 percent in two days. Analysts pinned it on a poor lineup of Switch titles at the show, but Nintendo executives hit back, blaming analysts for being short-sighted. Regulatory filings show Plotkin increased his short position on both days after E3 and continued short-selling in the following weeks. Melvin Capital accounted for 6.1 percent of volume on June 22 and 7 percent on July 17, according to the filings.
Not all investors are selling, with Nintendo’s largest shareholder Capital Group has used the market rout as an opportunity to increase its position. Shares rallied — briefly — after it disclosed the purchases.
It’s not clear how long Plotkin will stick with his short position. Hedge funds tend to make brief bets, in part because borrowing shares for shorting can be expensive over longer periods. On average, Melvin Capital has held stocks for about 8 months, according to all filings since 2014 analyzed by Bloomberg. The analysis did not include stocks it may have bought and then sold in the same quarter and also excluded options. The fund does not disclose how long it holds it short positions for.
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.
It is a bit SAD that the BIG 3rd Party Publishers don't support the SWITCH more..
Bethesda did OK with DOOM (340,000) and SKYRIM (890,000). And I'm sure WOLFENSTEIN II sales will come within the range of those two games. That's over 1 Million+ copies of games that they wouldn't have sold if they didn't port over.
by not supporting the SWITCH (even with their older games), they are missing out on an 'install base of about 18 million people.'
I guess they're doing so well right now that they're all willing to leave "free money on the table'
"Nintendo Plans To Operate "Under A Next-Generation Collective Leadership System"
...that sounds like CODE to me for, you have a fiduciary responsibility to your shareholders-- BUY BACK your stock...
...you have TOO MUCH CASH, return it to the investors... ...stop spending so much investing in your games... ...you need to cut corners, shorten levels of play...etc..
force of habit for having to communicate with family halfway around the world by email/message.
...talking with them directly by phone (which is my pref) is kinda hard when u don't know what time they are at work, or if they're sleeping...
...the CAPS are mostly for them...so they can get the HIGHLIGHTS (lol...did it again)...of what is important--so they can skim over any written dialogue quickly...
Supposedly, the LAWFIRM that GAME DEVICE is using against NINTENDO is one of the topone , and their founder QUINN is one of the best litigators in the U.S.
...he actually was doing some work for CORPORATIONS that were doing business with WALL ST. BANKS...prior to '08...and once the RECESSION HIT--and companies he represented were going down the S-HOLE...bankruptcy/layoffs, he turned around and SUED the WALL ST. BANKS...
I don't think this LAWSUIT is going to end anytime soon for NINTENDO...
...but I'm curious if the BIG N will just SETTLE for an undisclosed amount...
...kinda like that subsidiary company that ZENIMAX (owner of BETHESDA) owns, that SUED FACEBOOK-- over their OCCULUS VR...
...ZENIMAX got a cool $500 MILLION from that case...
Here's a SUMMARY of GAME DEVICE (WIKIPADS) original complaint...
Quinn Takes Aim at Nintendo
Nintendo‘s Switch gaming console is back in the sites of Quinn Emanuel Urquhart & Sullivan. Quinn client Gamevice, a maker of gaming consoles that attach to mobile phones and tablets, sued Nintendo and Nintendo of America for patent infringement in the Northern District of California last week. Gamevice says Nintendo’s Switch, which debuted in 2016 as the “home console that you can take anywhere,” infringes its patented technology.
Quinn co-founder John Quinn and partner Chris Mathews headline Gamevice’s team. The pair filed a similar complaint against Nintendo last August in the Central District of California, then dismissed it voluntarily in November. The new complaint is more specific about venue—it notes that Nintendo of America has a regular and established place of business at a specific address in Redwood City—and asserts two new patents obtained in September and November.
Gamevice v. Nintendo alleges that when the Switch’s Joy-Con controllers are attached to the Switch console, which they must be to recharge, that Gamevice’s patents are infringed.
A patent “troll” – or the more polite "PAE" (or patent assertion entity, a term I coined) is an entity that asserts patents as their primary business model. The term "PAE" is narrower than the commonly used “NPE” (or non-practicing entity) because PAEs *don’t *include entities like startups and universities whose goal is to get their technologies out there.
Naming and name-calling aside, the key is that PAEs aren’t focused on getting technology developed or making products – assertions are their “product.” That’s not inherently good or bad, and in fact, PAEs support a vibrant secondary market for patents, which can address the needs of small inventors who have been shut out of the system for years due to high costs of enforcement.
But this model is concerning because it gives PAEs a freedom to litigate that most companies don’t have: Trolls can sue customers, because they don’t have any. Trolls can sue without worrying about countersuit, because they don’t make anything. Trolls don’t have to worry about reputational or other harm to their core business, because asserting patents is their core business model.
However, PAEs also have to worry about things that companies don’t. When backed by public investors, for example, PAEs need to show consistent trolling returns, quarter after quarter.
Elder Scrolls SKYRIM 740,000 copies sold DOOM 310,000 copies sold Mario + Rabbids Kingdom 1.8 MILLION copies sold Snipperclips PLUS 80,000 copies sold
...Snipperclips seems more like something that should have been a GIVE AWAY TOSS IN for buying the SWITCH...
...UBISOFT is by far the LARGEST 3RD PARTY publisher...not quite sure what else they can bring over...they already did RAYMAN LEGENDS...
...DOOM & SKYRIM sold 1.05 MILLION combined for BETHESDA...we're getting WOLFENSTEIN II...but the question is if ZENIMAX decides to develop any games for the SWITCH...granted it's only been less than 1 year for game sales...
...on a SIDENOTE, looks like EA for the SWITCH sold 740,000 copies of FIFA 2K18...and 330,000 copies of NBA2K...
...not sure if these numbers will ENTICE EA to bring any other games...but it's still early...year 3-4 of the SWITCH will be important in terms of number of consoles sold...
...I'm kinda worried that DEVELOPERS are making such HUGE GAMES now (in terms of GB), that the SWITCH with it's 32GB internal storage would be a detriment...
...I think the original TITANFALL was over 50GB...and that was in the early 2010s...
...but when I see MONSTER HUNTER WORLD come in UNDER 20 GB, it gives me hope...
For a GAME that is almost 6-7 years old, 400K is an unexpected BONUS...
...I myself am HOLDING OUT until Bayonetta 3 is released....so i can BUY the TRILOGY...
...I'm sure there are fans waiting for 3 to come out so they can BUY THEM ALL...
...it's not unreasonable to think that within 1-2 years, Bayonetta 1-2-3 on the SWITCH will have sold a MILLION a piece...
...now, if I can only GO DEAF when PC Fanboys complain about NO PC release for Bayonetta 2 & 3...and hear them COMPLAIN the SWITCH is a piece of junk with it's LQ GRAPHICS...
Comments 17
Re: Wall Street Analyst Warns Of Slowing Nintendo Switch Sales
Looks like NINTENDO's stock fall is due to ONE HEDGE FUND guy...
https://www.bloomberg.com/news/articles/2018-07-30/sac-alum-plotkin-makes-a-massive-short-bet-against-nintendo
here's the article for anyone interested.
There’s a new villain in the world of Nintendo Co.
Gabriel Plotkin, head of New York hedge fund Melvin Capital Management, has accumulated a $375 million short bet against the Japanese game maker, according to regulatory filings. The former star trader at SAC Capital Advisors accounted for as much as 7 percent of Nintendo’s daily volume in recent weeks, contributing to stock declines since May that have stunned analysts.
Investors have been baffled by the sudden swoon and Plotkin’s position may add to their concerns. The stock’s poor performance has dominated coverage in the financial and gaming press, and discussions on social media, with questions raised about whether long-term shareholders are losing faith in the outlook for the Switch game console. Shares fell as much as 27 percent from their peak in May.
“With Nintendo, there were too many longs and now they’ve exited and started shorting the stock as well,” said Atul Goyal, an analyst at Jefferies Group.“The flows have changed.”
Plotkin’s fund was short 1.1 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 until last week, though it trimmed slightly on July 24.
Read More: Nintendo Seeks Next Level in 130-Year-Long Quest to Stay Alive
Plotkin started his firm in December 2014 with the blessing and financial support from Steven A. Cohen, the controversial founder of SAC Capital. In 2015, Plotkin’s first full year in business, Melvin Capital returned 47 percent, putting him at No. 2 on Bloomberg’s global ranking of the top 50 hedge funds with more than $1 billion in assets. It has maintained that strong pace in recent years through bullish bets on Amazon.com Inc. and Netflix Inc.
Melvin Capital, which has about $7 billion in assets, would not explain its thesis for shorting Nintendo, with Plotkin and Chief Operating Officer David Kurd declining multiple requests for comment. The hedge fund employs a "bottom-up, fundamental" process for identifying stocks to buy and short, according to U.S. regulatory filings. It focuses on consumer companies and owned about 70 stocks including Electronic Arts Inc. and Twitter Inc., according to the latest filing in May.
The downward pressure on Nintendo shares has sowed confusion among executives, investors and analysts. The Switch became one of the fastest-selling consoles in history after its release last year, quintupling the company’s annual operating profit. Many analysts were bewildered when shares began dropping sharply in May, leading to the biggest gap in a decade between brokerage targets and the actual stock price. Goyal called the declines “shocking” at the time.
Nintendo shares closed at 37,900 yen Friday, down 8 percent for the year.
The chaos peaked in June during the Electronic Entertainment Expo (E3), when shares plunged 11 percent in two days. Analysts pinned it on a poor lineup of Switch titles at the show, but Nintendo executives hit back, blaming analysts for being short-sighted. Regulatory filings show Plotkin increased his short position on both days after E3 and continued short-selling in the following weeks. Melvin Capital accounted for 6.1 percent of volume on June 22 and 7 percent on July 17, according to the filings.
Not all investors are selling, with Nintendo’s largest shareholder Capital Group has used the market rout as an opportunity to increase its position. Shares rallied — briefly — after it disclosed the purchases.
It’s not clear how long Plotkin will stick with his short position. Hedge funds tend to make brief bets, in part because borrowing shares for shorting can be expensive over longer periods. On average, Melvin Capital has held stocks for about 8 months, according to all filings since 2014 analyzed by Bloomberg. The analysis did not include stocks it may have bought and then sold in the same quarter and also excluded options. The fund does not disclose how long it holds it short positions for.
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.
Re: 2K Announces Carnival Games For Nintendo Switch, Partying Hard This November
It is a bit SAD that the BIG 3rd Party Publishers don't support the SWITCH more..
Bethesda did OK with DOOM (340,000) and SKYRIM (890,000). And I'm sure WOLFENSTEIN II sales will come within the range of those two games. That's over 1 Million+ copies of games that they wouldn't have sold if they didn't port over.
by not supporting the SWITCH (even with their older games), they are missing out on an 'install base of about 18 million people.'
I guess they're doing so well right now that they're all willing to leave "free money on the table'
Re: Talking Point: What Are You Playing This Weekend?
apparently I'm playing...
...Death Squared...wasn't planning on it...
...but once I saw that 33% OFF on the eSHOP
Re: Video: The Inevitable Nintendo Switch E3 2018 Predictions Video
Zelda Ports...
...and SUPER SMASH BURGERS at the Nintendo Booth...
Re: Nintendo Plans To Operate "Under A Next-Generation Collective Leadership System"
"Nintendo Plans To Operate "Under A Next-Generation Collective Leadership System"
...that sounds like CODE to me for, you have a fiduciary responsibility to your shareholders-- BUY BACK your stock...
...you have TOO MUCH CASH, return it to the investors...
...stop spending so much investing in your games...
...you need to cut corners, shorten levels of play...etc..
...that's the proper business mindset, no?
...or am I just to pessimistic?
Re: Gamevice Wants The US To Block Nintendo Switch Imports Because It Infringes On Its Patents
@ThanosReXXX
sorry for the CAPS (lol...did it again)...
force of habit for having to communicate with family halfway around the world by email/message.
...talking with them directly by phone (which is my pref) is kinda hard when u don't know what time they are at work, or if they're sleeping...
...the CAPS are mostly for them...so they can get the HIGHLIGHTS (lol...did it again)...of what is important--so they can skim over any written dialogue quickly...
sorry about that...I'll stop now...
Re: Gamevice Wants The US To Block Nintendo Switch Imports Because It Infringes On Its Patents
@ThanosReXXX
Supposedly, the LAWFIRM that GAME DEVICE is using against NINTENDO is one of the topone , and their founder QUINN is one of the best litigators in the U.S.
...he actually was doing some work for CORPORATIONS that were doing business with WALL ST. BANKS...prior to '08...and once the RECESSION HIT--and companies he represented were going down the S-HOLE...bankruptcy/layoffs, he turned around and SUED the WALL ST. BANKS...
I don't think this LAWSUIT is going to end anytime soon for NINTENDO...
...but I'm curious if the BIG N will just SETTLE for an undisclosed amount...
...kinda like that subsidiary company that ZENIMAX (owner of BETHESDA) owns, that SUED FACEBOOK-- over their OCCULUS VR...
...ZENIMAX got a cool $500 MILLION from that case...
Re: Super Mario Odyssey Passes The 10 Million Sold Marker
@westman98
...I actually CONFIRMED it a 2nd TIME off NINTENDO's FINANCIAL STATEMENTS...off their JAPAN WEBSITE...
Re: Gamevice Wants The US To Block Nintendo Switch Imports Because It Infringes On Its Patents
Here's a SUMMARY of GAME DEVICE (WIKIPADS) original complaint...
Quinn Takes Aim at Nintendo
Nintendo‘s Switch gaming console is back in the sites of Quinn Emanuel Urquhart & Sullivan. Quinn client Gamevice, a maker of gaming consoles that attach to mobile phones and tablets, sued Nintendo and Nintendo of America for patent infringement in the Northern District of California last week. Gamevice says Nintendo’s Switch, which debuted in 2016 as the “home console that you can take anywhere,” infringes its patented technology.
Quinn co-founder John Quinn and partner Chris Mathews headline Gamevice’s team. The pair filed a similar complaint against Nintendo last August in the Central District of California, then dismissed it voluntarily in November. The new complaint is more specific about venue—it notes that Nintendo of America has a regular and established place of business at a specific address in Redwood City—and asserts two new patents obtained in September and November.
Gamevice v. Nintendo alleges that when the Switch’s Joy-Con controllers are attached to the Switch console, which they must be to recharge, that Gamevice’s patents are infringed.
Re: Gamevice Wants The US To Block Nintendo Switch Imports Because It Infringes On Its Patents
here's a helpful definition on the subject...
what exactly is a patent troll?
A patent “troll” – or the more polite "PAE" (or patent assertion entity, a term I coined) is an entity that asserts patents as their primary business model. The term "PAE" is narrower than the commonly used “NPE” (or non-practicing entity) because PAEs *don’t *include entities like startups and universities whose goal is to get their technologies out there.
Naming and name-calling aside, the key is that PAEs aren’t focused on getting technology developed or making products – assertions are their “product.” That’s not inherently good or bad, and in fact, PAEs support a vibrant secondary market for patents, which can address the needs of small inventors who have been shut out of the system for years due to high costs of enforcement.
But this model is concerning because it gives PAEs a freedom to litigate that most companies don’t have: Trolls can sue customers, because they don’t have any. Trolls can sue without worrying about countersuit, because they don’t make anything. Trolls don’t have to worry about reputational or other harm to their core business, because asserting patents is their core business model.
However, PAEs also have to worry about things that companies don’t. When backed by public investors, for example, PAEs need to show consistent trolling returns, quarter after quarter.
Re: Nintendo Plans To Go Big With Super Smash Bros. For Switch At E3 This Year
hmmm....my local GAMESTOP has SUPER SMASH release date 12/31/2018...
...i would have figured it would be released after NOV, early DEC
Re: A Recent Datamine Has Unearthed New Dream Friends Coming To Kirby Star Allies
CONGRATS to KIRBY...
...another 1 MILLION Seller on THE SWITCH...
Re: Super Mario Odyssey Passes The 10 Million Sold Marker
@JohnQuixote
VGZcharts has listed for 2018 so far
Elder Scrolls SKYRIM 740,000 copies sold
DOOM 310,000 copies sold
Mario + Rabbids Kingdom 1.8 MILLION copies sold
Snipperclips PLUS 80,000 copies sold
...Snipperclips seems more like something that should have been a GIVE AWAY TOSS IN for buying the SWITCH...
...UBISOFT is by far the LARGEST 3RD PARTY publisher...not quite sure what else they can bring over...they already did RAYMAN LEGENDS...
...DOOM & SKYRIM sold 1.05 MILLION combined for BETHESDA...we're getting WOLFENSTEIN II...but the question is if ZENIMAX decides to develop any games for the SWITCH...granted it's only been less than 1 year for game sales...
...on a SIDENOTE, looks like EA for the SWITCH sold 740,000 copies of FIFA 2K18...and 330,000 copies of NBA2K...
...not sure if these numbers will ENTICE EA to bring any other games...but it's still early...year 3-4 of the SWITCH will be important in terms of number of consoles sold...
...I'm kinda worried that DEVELOPERS are making such HUGE GAMES now (in terms of GB), that the SWITCH with it's 32GB internal storage would be a detriment...
...I think the original TITANFALL was over 50GB...and that was in the early 2010s...
...but when I see MONSTER HUNTER WORLD come in UNDER 20 GB, it gives me hope...
Re: The Switch Port Of Bayonetta 2 Has Outsold Its Sister Version On Wii U
For a GAME that is almost 6-7 years old, 400K is an unexpected BONUS...
...I myself am HOLDING OUT until Bayonetta 3 is released....so i can BUY the TRILOGY...
...I'm sure there are fans waiting for 3 to come out so they can BUY THEM ALL...
...it's not unreasonable to think that within 1-2 years, Bayonetta 1-2-3 on the SWITCH will have sold a MILLION a piece...
...now, if I can only GO DEAF when PC Fanboys complain about NO PC release for Bayonetta 2 & 3...and hear them COMPLAIN the SWITCH is a piece of junk with it's LQ GRAPHICS...
Re: Switch Sales Top 15 Million As Nintendo Profits See 500% Increase
14.8 Million close of 2017...
17.79 Year To Date...
...the switch is averaging a about 990,600 SWITCHES SOLD a month...
at that PACE they'll have sold 11,887,200 by the end of DEC...(minimum)...
...not including the HOLIDAY RUSH in NOV/DEC sales...I plan on buying 2 for my Nephews...
...they'll probably end the year selling between 26-27 Million LIFETIME sales...
...by the end of their 3rd year, they'll probably SURPASS XBOX...which sounds so strange when I say that...
...only wish there was MORE INTERNAL STORAGE...32 GB is not what I expected from a 299.99 device...
...but I guess that means I'll be in line for the SWITCH 2.0 when it releases...
Re: Nintendo Switch Continues To Dominate The Hardware Charts In Japan
It's important that the SWITCH does well there...so we can get as many Japanese developers on board...which means, more games for US to enjoy...^_^
Re: Random: Switch eShop Censorship Of Metropolis: Lux Obscura Doesn't Go Far Enough
Nice TOAD!!!