Take-Two Interactive Software, Inc. (TTWO)

hoytw (72.66) Submitted: 3/20/07 3:11 PM : Start Price: $21.90 TTWO Score: 17.27

Last week, SAC Capital, Tudor Investment, DE Shaw and Oppenheimer Funds (probably four of the top 10 hedge funds in the history of the world) announced that between them, they now owned 47.2% of Take-Two Interactive Software (nasdaq: TTWO - news - people ) and that they were, as a group, filing a slate of candidates for the board of directors. Most of the shares that this group bought over recent months were between the prices of $18.50 and $20.50. The stock closed on March 14 at $20.60. The stock made its 52-week high of $21.06 in February. While SAC Capital's returns have never been published, investors in the fund have claimed that they've earned at least 40% per year since 1992, when it was started by Stevie A. Cohen. It is involved in the backdated options scandal, and its CEO, Ryan Brant, has even pleaded guilty to backdating stock options. Last month, the company restated all of its earnings back to 1997.Strauss Zelnick, who took a fledgling BMG from last place to second when he was in charge of its music division, has agreed to either run Take-Two or find a CEO, should the activists take over the board. Take-Two trades for barely one times sales and 23 times estimates for next year's earnings, compared with a competitor like Electronic Arts (nasdaq: ERTS - news - people ), which trades for five times sales and 37 times next year's earnings. I'm a little concerned that Icahn recently sold his entire stake in TTWO on 2-6-07
Forbes pick.

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