JAKKS Pacific Shares Soared: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of JAKKS Pacific (Nasdaq: JAKK  ) surged more than 24% Wednesday after investment fund Oaktree Capital Management offered to buy the toy maker for $670 million.

So what: The all-cash offer values JAKKS at $20 per share, representing a 25% premium to its Tuesday closing price. According to Oaktree, taking JAKKS private would allow the company to "execute a long-term value creation strategy free from the pressures of managing short-term objectives and seasonality."

Now what: When you make more than 20% in one morning, taking at least some dough off the table seems like the prudent thing to do. While Oaktree said it is willing to raise its bid if JAKKS could demonstrate more value during the due diligence process, the upside seems small given the risks that still remain. After all, with toy giants Mattel (NYSE: MAT  ) and Hasbro (NYSE: HAS  ) now trading at a forward P/E discount to JAKKS, you'll have plenty of fun places to roll your bet over.

Interested in more info on JAKKS? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Hasbro and Mattel. Try any of our Foolish newsletter services free for 30 days.

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Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 14, 2011, at 1:31 PM, teddylevy wrote:

    To Jakks: As a loyal long-term shareholder, I urge you to NOT accept any offer less than $35/share. The current offer, barely above 1x tangible book value, is an insult to shareholders and management. To be worthwhile, a bid must include a large amount of goodwill to account for the well-established Jakks name and strong business structure. Taking advantage of current depressed stock prices in this deep recession is not acceptable. Do NOT cave in!

  • Report this Comment On September 14, 2011, at 1:38 PM, teddylevy wrote:

    To expand a bit more, the article above is quite misleading. Trailing and forward p/e's for the three companies are VERY close. But, Mattel and Hasbro are currently valued at between two to more than three times as much in price/sales and price/book as Jakks, and that's including the jump in Jakks share price today. Look at Key Statistics on Yahoo Finance to confirm.

    It makes NO sense to take some "dough off the table" at this point.

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