Toy manufacturer, Mattel Inc. (NASDAQ:MAT) was another top contributor, jumping +24.87% in the period. MAT continues to make progress executing on the turnaround strategy to stabilize revenues, reduce costs and ultimately improve profitability. Excluding the impact of the Toys “R” Us liquidation, the company posted positive worldwide gross sales growth driven by strong momentum in its key power brands, with Barbie® and Hot Wheels® each up double-digits in the quarter. Inventory was well managed and MAT eliminated the liquidity overhang on shares by amending and extending a long term debt maturity and using the proceeds to prepay a note that was due near term. Additionally, MAT appointed a new CEO, Ynon Kreiz, who has over 20 years of experience in the media and entertainment industries. In our view, MAT has the right people in place to deliver on its strategic imperatives. That said, we realize change does not happen overnight and we are keeping a close eye on indicators that highlight continued execution. In the meantime, shares are trading at a substantial discount to our estimate of private market value, and although we project modest growth across the toy industry, we expect MAT to offer stable and consistent earnings and cash flow over the long term.
From John Rogers (Trades, Portfolio)' Ariel Fund second quarter 2018 shareholder letter.
