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RS Weekly Update - ATVI and Banks

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November 05, 2010 – Comments (0)

Hey Fools,

Not so long ago I decided to show what diversity can do for the average investor by taking a diverse collection of stocks and putting them to work together. And I gotta say it was a lot of fun. Maybe you saw these articles. Then again, maybe you didn’t (http://bit.ly/9TwsVi). But to date, my portfolio is beating the S&P 500 by 2.5% with a positive absolute return of 14.5%.

Don’t get me wrong. I know the success (Is failure an option?) of my investing strategy can’t be judged in a matter of months. It will take years to pan out. The idea behind this hypothetical portfolio was to find solid companies and build a diverse portfolio with them. Time will tell the story, but I like the way it has started.

Fool on!

Jason Moser (TMFJMo)

Activision Blizzard

Well it was a blowout quarter for Activision Blizzard (Nasdaq: ATVI) as they reported earnings of $0.04 per share on $745 million in revenue (GAAP). Non-GAAP revenues were $857 million with EPS of $0.12. With the increase in digital content, some revenue ends up as deferred which makes GAAP numbers lower. Non-GAAP numbers account for the deferred revenue to get a better idea of the business that has been booked. I like to see both.

The key to the quarter no doubt was StarCraft II: Wings of Liberty. The game sold over 1 million copies in the first 24 hours, 1.5 million in the first two days and has sold more than 3 million copies to date. So for those counting, this is the best selling PC game of 2010 and the fastest selling-strategy game of all time. And with the releases of World of Warcraft: Cataclysm as well as Call of Duty: Black Ops slated toward the end of the year, business should continue to boom for these guys. Top it all off with management buying back even more shares (55 million shares for approximately $600 million so far this year) and I like where things are heading.

Yes, Activision Blizzard is seemingly unloved by the market. And yes, this one may take some patience. But like I have said from the beginning, time is on my side and I will wait happily for this one to play out.

Watch List

For those who missed it, Wells Fargo has made the watch list (http://bit.ly/bzFQEo).   

I have been keeping an eye on banks as I think there is some opportunity for long-term quality out there. My only problem right now with Wells is that the stock has been running up. Today’s news regarding the Fed giving the green light to let banks raise their dividends (http://reut.rs/94i4Th) should steer some more eyes to the sector, that’s for sure. Regardless I will be watching this one going forward.

Jason owns shares of Wells Fargo

Straight from the Onion

The poor guy’s feeling left out: http://onion.com/9NrSi4

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