# Mega Bloks MB.TO



## Jeebs (Jun 1, 2011)

Good Morning,

I was just wondering people's opinions on MB.TO, It's been performing fairly strongly for the last year. Also, leading into the Christmas season, their new Skylanders game has been getting very strong reviews and has sold well in the past.

Any insight would be appreciated.


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## londoncalling (Sep 17, 2011)

I would buy LEGO(I seriously wanted to own shares) but it is not a public company. Like some gold bugs I prefer to hold the real thing as opposed to the paper. My son prefers the physical stuff to just the pictures and instructions. Cheers. MegaBrands may be a similar play but I don't follow it close enough to comment. Watching to see where this thread goes with curiosity.


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## doctrine (Sep 30, 2011)

It seems to have a P/E north of 25 and no dividend (nor any record of it ever paying a dividend), so it fails my initial screen. Unless there is some other information out there I wouldn't look further.


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## MrMatt (Dec 21, 2011)

Jeebs said:


> Good Morning,
> 
> I was just wondering people's opinions on MB.TO, It's been performing fairly strongly for the last year. Also, leading into the Christmas season, their new Skylanders game has been getting very strong reviews and has sold well in the past.
> 
> Any insight would be appreciated.


Up 60% YTD, unless you think there is a lot more upside I'd say this is a case of buying high, hoping for higher.
Not that I'm never guilty of that (bought MU a few dollars ago), but you've got to be careful.

What does your valuation say?


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## humble_pie (Jun 7, 2009)

it was 3-4 years ago, in the aftermath of the 08/09 collapse, that Prem Watsa bailed out mega blox in his usual manner. Watsa & warren buffett are friends, in fact sometimes i've wondered if it was watsa who taught the lucrative bailout strategy to buffett.

goes like this: appear alongside the corporate deathbed just before rigor mortis sets in & offer to save broken company with scheme involving convertible preferred shares or convertible debt/warrants or whatever. The deal has to mean a rescuing infusion of capital for the stricken company plus high interest rates or pfd dividend rates plus a healthy big whack of gain potential in the common stock or its warrants for undertakers like watsa & buffett to be interested.

the dutch government did an identical $10 billion euro deal with ING bank in late 2008. At the time, its amsterdam-based VP/CFO was a canadian actuary from toronto who presumably had been an "A-plus" student in the watsa/buffett academy.

i've never had an interest in mega blox but right now, if i did, i'd be looking to see what watsa & fairfax might be doing with all those lovely common shares they've profited from.


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## Jeebs (Jun 1, 2011)

MrMatt said:


> Up 60% YTD, unless you think there is a lot more upside I'd say this is a case of buying high, hoping for higher.
> Not that I'm never guilty of that (bought MU a few dollars ago), but you've got to be careful.
> 
> What does your valuation say?


I've got to admit, I'm still pretty new and am learning how to identify stocks with future value. I haven't added a position because, as someone else mentioned, I don't want to be buying high. However they have some products that are selling well and receiving some critical acclaim and the stock has continued to rise. I think I'll sit this one out though, but my gut says there is room to grow.


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## megainvestor (Oct 23, 2013)

doctrine said:


> It seems to have a P/E north of 25 and no dividend (nor any record of it ever paying a dividend), so it fails my initial screen. Unless there is some other information out there I wouldn't look further.


that P/E of 25 is wrong, not even based off 2012 annual eps. Based on the lowest analyst eps estimate for 2013, which is 1.07, the P/E at today's price at 17, the P/E is just about 16; not to mention we should be forward looking, which means 2014 estimation eps is a better indicator, where the avg eps is 1.4.



humble_pie said:


> i've never had an interest in mega blox but right now, if i did, i'd be looking to see what watsa & fairfax might be doing with all those lovely common shares they've profited from.


FYI, fairfax converted all its warrants into commons earlier this year and the company used the proceeds to pay off the debt which is also owned by fairfax. basically, fairfax traded its debt into equity. What does that tell you?




Jeebs said:


> I've got to admit, I'm still pretty new and am learning how to identify stocks with future value. I haven't added a position because, as someone else mentioned, I don't want to be buying high. However they have some products that are selling well and receiving some critical acclaim and the stock has continued to rise. I think I'll sit this one out though, but my gut says there is room to grow.


I am a long time MB investor since their recap in 2010 and have a holding of about 400k in combination of warrants/commons at today's price, unrealized gain about 200k; so I know a few things or two about MB. 

1st of all, if you want to learn about MB, there is an article on canadian toys, which explains the whole story, and even gives insight on how it was able to bring production back to Canada.
http://www.canplastics.com/news/mega-brands-lays-building-blocks-for-growth/1002620899/

MB's old market cap during 2005-2006 was averaging 700-800m, before the RoseArt disaster. Now we are at almost 400m, still just half way before its former glory. Sales volume is climbing and it's destined to reach prevous highs judging by how well the products are doing, and how much better the products actually is, i.e. the halo line, the wow line, need for speed, skylander, barbie, the most recent innovation: the call of duty line. Call of duty is branded as game changer in the brick world due to the amount of articulation and details that goes into one figure. I've been testing these toys myself and have watched countless youtube reviews on most of its brick products and conclusion is that the mass perception is changing; i.e. old die hard lego fans dislike megabloks and think it's a knockoff product; however, with the halo and especially the new COD, a lot of brick fans are changing their attitude towards MB, which is huge. I have pretty high anticipations, lego now holds 9/10 of the market, MB shares the 1/10 with other folks. I admit MB bricks are inferior to lego but it makes up with details in figures, basically going in different direction. So I think MB has potential to grab 1/4 of the global market, and if market believes that, the stock would surpass its former glory and a lot more consider middle class of China is increasing and that's a brand new market with huge buying power. Anyways, I am holding and hoping for the best. Hope that helps.


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