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No. of Recommendations: 6
You can't really compare the price of Toys R Us shares to Hasbro shares directly, because a single share means very little; Since a Berkshire Hathaway share is worth thousands, so can a share of any other company, right?

Furthermore, remember that TOY and HAS are in different businesses. TOY is a game retailer, while HAS is a game manufacturer. Toys R Us makes money by deciding which available products are good choices for the shelves, and how to make individual stores attractive. Hasbro has to maintain innovation in their product line, predict children's trends, and direct them to their products.

At present, I would say that there are two important properties for Hasbro where the most revenue growth will occur for the company: Tiger Electronics and Wizards of the Coast. Tiger has managed to produce more and more sophisticated toys, using the latest technologies instead of competing against them like most toys need to do. WotC has oddly mastered competing with technologies by appealing to skills that the new technologies need: creativity and analysis. By specializing in strategic (not to mention addictive) collectible card games and in creative role-playing games (Witness Third Edition D&D, the very best intellectual property to own in the entire hobby game industry), WotC continues to try to reinvent themselves into something that is not only more mentally stimulating, but something that is more approachable to the mainstream.

Hasbro's stock potential should be measured by its managerial effectiveness and ability to generate future revenue, not solely by its relationship to its competitors. Although Mattel, Toys R Us, and other smaller toy industry players have had relatively poor management as of late, this is no guarantee that Hasbro is any better. The purchase of WotC last year was a very good sign; the recent debt offerings, not so good. Furthermore, read the amount of vitriol spewed at Hasbro Interactive a couple of months back; if there's one place that a company in the business of children's entertainment needs to do well, it's in computer games, and quite frankly, Hasbro's competitors are managed at least as well and produce more stable products.

As far as recent events are concerned, I'm still mixed about Hasbro's potential. If I could invest solely in Tiger or WotC, I'd invest a lot into just them. However, since I have to buy the whole of the company, I have to be a little more careful.

Admittedly, Hasbro certainly looks like an excellent value play. I'll probably still increase my holdings. But there is still some concern, so it's not an easy choice to make.
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