"When I see short interest go up into the right... I want to dig deeper."
"We came in as a long at first... then we followed the evidence to get to the short side."
"Magic has been the crown jewel of the company—but we think expectations have gotten too high."
[Using Carbon Arc data] “average weekly users on the app through quarter to date to q2 it's down 11 percent”
"You have to be intellectually honest. You can't just ignore evidence because it doesn't support your thesis."
Glenn and Vito won both the Fordham and Notre Dame Stock Pitch Competitions with a contrarian short thesis on Hasbro ($HAS). What began as a long idea quickly turned into a short after they dug into Magic: The Gathering, channel checks, local game store surveys, player sentiment, and Wizards of the Coast's product strategy.
In this episode, they walk through the full research process behind their pitch, discuss why they believe Magic's recent growth is unsustainable, and explain how primary research, financial modeling, channel checks, and alternative data on Carbon Arc helped shape their view.
Stocks: $HAS
*Not Investment Advice
Disclosure: I have a short position. That may change at anytime.
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[01:00:00] Introduction to Glenn Lee and Vito, winners of the Fordham and Notre Dame Stock Pitch Competitions, and their Hasbro short thesis.
[01:03:03] How the investment idea evolved from a long thesis into a short after deeper financial analysis.
[01:05:54] The two pillars of the Hasbro short thesis: slowing Magic: The Gathering demand and weakness in consumer products.
[01:09:18] Doug explains how to think about short interest, positioning, and identifying crowded trades.
[01:11:39] Breaking down Hasbro's business segments and why Wizards of the Coast drives nearly all of the company's profitability.
[01:15:41] Why Magic: The Gathering has maintained its competitive advantage for more than 30 years.
[01:21:43] The Universes Beyond strategy and why the team believes it changes Magic's long-term growth profile.
[01:23:04] Hasbro's recent growth, management expectations, and why the students believe Wall Street is too optimistic.
[01:30:15] Doug's framework for continuously testing an investment thesis and remaining intellectually honest as new evidence emerges.
[01:34:11] The research process behind forecasting Magic: The Gathering demand using channel checks and industry expertise.
[01:36:35] How product releases and aggressive pricing have accelerated Magic's recent growth.
[01:38:21] Survey results, player backlash, and the debate around the Universes Beyond product strategy.
[01:43:19] Channel checks with local game stores and what retailer ordering patterns reveal about future demand.
[01:52:26] Using secondary market pricing to measure player demand and forecast future Magic sales.
[01:56:14] The key bull case for Hasbro, why attracting new players may not be enough, and the team's concluding thoughts on the investment thesis.
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