Selling out of Hasbro: staying true to the plan.
Toys are out, cash is in
Following an 'it's so bad, it's good' quarterly report, Hasbro is up 12% and I'm selling my entire remaining position. As a reminder, during 2023 my Hasbro long term bullish thesis got debunked. I shifted my holding from a long term core position into a trade. The thesis being:
"At the end of day, Hasbro is a company in a turnaround, and they'll probably execute on it over 2024 and 2025. It's not a sell at current prices with current dividend yield, but it's just not the focus I want to see from the company. Owning a slowly improving consumer products goods company wasn't my investment thesis and I lightened up on Hasbro throughout the year and plan on unloading most of my shares throughout 2024. Hasbro has shifted from a 'big bet' to a '12 month trade' (as a reminder trades are companies that I believe can outperform on a year timeline with a specific catalyst in mind)."
My thesis for holding Hasbro as a trade was:
2024 is a turnaround year for Hasbro. 2023 was as bad as it got. The stock was pricing in declining sales and worse.
The stock was not taking into account the success in digital gaming (Monopoly Go! and Baldur's Gate 3), cutting costs and inventory and a much better 2025 on the horizon (Magic the Gathering collaborations with Marvel for one).
A 5% dividend yield is as high as it comes for Hasbro.
Together, this formed a good risk/reward for 2024 where the stock could outperform as it caught up. Having caught a 30% rise since January I'm now exiting this position:
It's important to have discipline and stick to the plan. A trade is a trade, and an investment is an investment. An improving stock price doesn’t make Hasbro an investment for me. Hasbro is still a slow growing toy company. While it has good tailwinds and I can see the price reaching the mid 70’s, I don’t have conviction it will meaningfully outperform going forward now that I've caught the initial reversal and the heavy lifting is still ahead for the company (consumer products forecast to shrink -7 to -12% this year).
I'm happy to raise cash as a buffer for other positions in my portfolio that have sold off during the April sell off: Monday, Adobe, Aerovironment, QQQ and Copart.