Santa Monica toymaker Jakks Pacific Inc. has seen a spate of sell-offs by large shareholders, among them Patrick Soon-Shiong, who has reduced his stake by more than one-third in the last couple of months.
The selloff began March 31 when Soon-Shiong, who topped the Business Journal’s list of Wealthiest Angelenos this year with an estimated net worth of $15.4 billion, sold 1 million shares for nearly $7.5 million. He sold about 200,000 more shares between June 7 and 22. However, the health care and publishing magnate is still the company’s largest shareholder, holding about 2.7 million shares, which represents a roughly 14 percent stake in the company excluding warrants.
Soon-Shiong’s initial sale was followed by New York investment management firm Renaissance Technologies Corp., which on March 31 sold more than 140,000 Jakks shares, bringing its stake to 1.6 million shares. Chicago asset manager PPM America Inc. reduced its stake by nearly 98,000 shares the same day, reducing its total to 600,000 shares.
Soon-Shiong said in a statement emailed by a spokesman that “nothing should be inferred” from his recent sales of Jakks stock.
“I have a broad and extensive portfolio and my (advisers) are buying and selling securities on a fairly regular basis,” he said. “Jakks is a great company, with great management.”
While his reduced position might reflect the regular churn in a large and complicated portfolio, one analyst suggested he could be displeased with Jakks’ modest use of image-recognition technology developed by NantWorks, Soon-Shiong’s Culver City health care technology firm.
Jakks and NantWorks companies created a joint venture in 2012 called DreamPlay Toys to develop and distribute toys utilizing the technology. The partnership was extended for three years in September.
“On the toy side, we haven’t seen a compelling new product coming from that partnership,” said Gerrick Johnson of BMO Capital Markets. “I don’t know what’s in his head, but if I were him, he may be disappointed there’s not more coming out.”
Representatives of Renaissance and PPM did not respond to requests for comment.
Shares of Jakks closed at $7.71 on June 22, down 2.7 percent for the week. Shares have fallen more than 15 percent from a year ago.
Despite the decline in value, Jakks’ core business appears steady. While the first quarter is typically a slow period for the company after the holiday season, it reported that the $95 million it posted in sales during the period ended March 31 represented its second-highest first-quarter figure in seven years.
“While the toy industry remains highly competitive, Jakks has a significant advantage in designing, manufacturing, and distributing products with great speed to market,” wrote a company spokeswoman in an email.
Jakks has set an ambitious target of $800 million in sales for this year, a 7 percent increase over the previous year. However, the company might have trouble hitting that number, said Linda Bolton Weiser, an analyst for West L.A.’s B. Riley & Co., which could cause further selloffs.
“They have a pretty high bar set for growth for the second half of the year, which is not to say they can’t make it,” said Weiser. “But it could be they don’t get there. If so, investors could be disappointed.”
Soon-Shiong’s desire to mesh his technology with industries beyond his initial health care interests has continued.
His Nant Capital acquired a nearly 13 percent stake in tronc Inc., the beleaguered owner of the Los Angeles Times. As part of Soon-Shiong’s $70 million investment, NantWorks has licensed more than 100 artificial intelligence and machine vision technology patents to the publisher.
