Hedge Fund Wants Nintendo to Make Mobile Games

March 2, 2014 Leave a comment

Hedge Fund Wants Nintendo to Make Mobile Games

Writes to President Iwata: Think of Paying 99 Cents ‘to Get Mario to Jump a Little Higher’

MIA LAMAR

Feb. 26, 2014 9:08 a.m. ET

A Hong Kong hedge fund manager called on Nintendo Co. 7974.TO -1.96% on Wednesday to begin developing and selling mobile games, a sign of growing dissent among shareholders of the world’s largest videogame company.

In a letter seen by The Wall Street Journal, Oasis Management founder Seth Fischer told Nintendo President Satoru Iwata that the company is “well placed to make an immediate entry into mobile” and that it sits atop “arguably the largest library of casual games.”

“The same people who spent hours playing Super Mario, Donkey Kong, and Legend of Zelda as children are now a demographic whose engagement on the smartphone is valued by the market at well over $100 billion,” wrote Mr. Fischer, whose fund owns Nintendo shares.

He couldn’t be reached for comment on the letter, earlier reported by Reuters. Nintendo spokesman Yasuhiro Minagawa said Nintendo will respond to individual investor requests individually, but is unlikely to make public its response. He added that Nintendo’s president had already responded to calls from investors that Nintendo develop and sell mobile games at its business strategy meeting last month.

Nintendo has been battling to stay relevant amid a gaming revolution that is making players quick to adopt cheaper, portable mobile games over Nintendo’s physical consoles. Tokyo-listed Nintendo shares are down nearly 50% from where they stood three years ago. On track to post a third-straight annual loss, the company last month dismissed suggestions that it jump into the fast-growing mobile game business.

“We are not going to just put our games on smart devices,” Mr. Iwata said at the January business strategy meeting. “We need our unique position as a developer of both hardware and software to maintain the scale of business Nintendo aspires to.”

Wednesday’s approach wasn’t the first from Mr. Fischer, a former Highbridge Capital Management executive who manages roughly $200 million at Oasis. He first appealed to the company in June and said he was prompted to follow up after Facebook Inc. last week said it would buy messaging application WhatsApp for $19 billion. He also pointed to the “dramatic success” recently of King Digital Entertainment, maker of the “Candy Crush Saga” game.

“We believe Nintendo can create very profitable games based on in-game revenue models with the right development team,” Mr. Fischer wrote. “Just think of paying 99 cents just to get Mario to jump a little higher.”

—Mayumi Negishi contributed to this article.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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