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Posts from the ‘King Digital (KING)’ Category

The upside is not reflected in King Digital

I added a new position in King Digital Entertainment (KING) this week.

I discovered the company while perusing through 13-F filings.   I search for hedge funds that have performed well in the last few years and look for tickers of either large or growing positions in those funds.  I found King via a fund called Steadfast Advisors.

King Digital is out of my usual area of competence.  The company is a video game developer and I have never invested in a video game developer before.  I’m not much of a gamer.  Nevertheless the company is extremely well-priced for scenarios outside of a collapse of the business, and I am an avid opportunist of market inefficiencies.

King is also a busted IPO.  The stock priced at $22 in March and is now $16.  The timing of the IPO was bad, both in terms of the market and the business.  It was a bad time for the market because tech has taken a pounding.  It was a bad time for the business because the biggest grossing game (by far) in the history of the company, Candy Crush, was beginning to go into decline. Read more