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Stocks H / Hasbro, Inc.


Subject:  Re: Hasbro shuts down its retail stores. Date:  1/5/2004  5:22 PM
Author:  Eldrehad Number:  1102 of 1222

Your perspective is, as usual, well stated and appreciated.

Thank you for the kind words. :-)

Do you own shares? And if so, what's your cost and what's your goal with this one?

I do own shares. I took a position at $12.00 in January of last year, and doubled it at $15.79 in May of last year, so my total basis (not counting transaction costs) is about $13.90 (not counting trasaction costs is fair in my case, as the dividends along the way have pretty much offset them). I just did a 'back of the envelope' calculation of my personal CAGR for Hasbro (considering the two different investments, and the size and timing of each) and figure my rate of return at about 70%/year so far, so not bad for one year to say the least.

My original goal was (hopefully) a double from my original $12 within about three years on the short side (for a CAGR of about 26%) and five years on the long side (for a CAGR of about 15%). With regard to the doubling of my position, while I was originally thinking 3 to 5 years to get to 'fair' value, after a 30% or so rise in less than six months it looked to me as if 'Wall Street' was catching on (and it was this 'catching on' I was waiting for) sooner rather than later. Again, since it was the 'catching on' I was waiting for, and since it looked like it was happening (even more quickly than I'd originally hoped), I doubled. To use a surfing analogy (I'm a native Californian, even though I've never surfed), I was waiting for the 'wave', and once I thought I saw it (the quick 30% rise), I decided to paddle a bit faster to maximize it (the double of my position). Make no mistake, I am not a market timer as market timing is outside my circle of competence. My original investing hypothesis suggested that Hasbro was undervalued, and that 'someday' fair value would be realized - the quick gain in a short time simply told me that the 'someday' might be happening sooner rather than later.

I've been toying with the idea of at least locking in some gains and selling half my position (as we've been flirting with the double from $12 for a little while now). I haven't seen anything to date that would lead me to believe that Habro is worth any less than my original goal of $24 in 3-5 years, so even if the upside is largely gone, I don't see any significant downside, so am in no hurry to sell. That doesn't mean I don't think we can go down from here, we certainly can. What it means, at least for me, is that even if we do hit a 'bump' in the road