The world's largest home entertainment software maker, Activision Blizzard (NASDAQ: ATVI), has seen its fair share of bullishness lately. Indeed, it finds its shares up nearly 40% since the beginning of 2013 after posting better-than-expected fourth-quarter and full-year results in early February. Going beyond that, the company has another exciting year in store for it.

How will Activision keep up the positive momentum for its shareholders? To answer the question, the Fool compiled a research report to break down the each critical facet of the Activision investment thesis. We've included an excerpt from one section below for our readers. Enjoy!

Leadership
Robert Kotick has been CEO at Activision since 1991. He helped orchestrate the merger of Activision with Vivendi Games in the summer of 2008, continuing to serve as CEO and President of the combined company.

The creation of Activision Blizzard four years ago was initially praised by investors. Merging Activision's portfolio of console and handheld games with Blizzard's popular PC and online subscription properties established Activision Blizzard as the largest video game software company.

With World of Warcraft peaking in popularity two years ago testing the merger thesis -- and the stock trading markedly lower than when the combination was completed in 2008 -- it's easy to question the logic behind the merger.

However, Kotick continues to make the best of the situation with the hand that he has been dealt.

The Foolish bottom line
Activision Blizzard may not be in favor, but it can afford to wait it out.

The company has nearly $3.4 billion in cash and investments on its debt-free balance sheet as of September 2012, or roughly $2.85 a share in greenery. That's a luxury that it can use to continue to repurchase shares or turn its attention to potential acquisitions in this fragmented industry.

Keep the cash in mind when valuing Activision Blizzard. The stock may be trading at an attractive earnings multiple based on the $1.10 a share that it is now targeting for all of 2012, but back out that $2.85 a share in cash and the multiple drops into the single digits.

Is that cheap enough?

Analysts aren't holding out for much in terms of organic growth at the company. They see revenue and earnings climbing 1% and 6%, respectively, in 2013. The company is also setting a conservative tone, pointing out how a lower tax rate in 2012 and the success of Diablo III resulted in $0.25 a share in earnings for 2012.

However, this is still a hits-driven business, and you never know when the next Skylanders, Guitar Hero, or Call of Duty will come from next.

Knowing Activision Blizzard, it will probably at the right place at the right time again.