Soumya Eswaran
3 min read
In This Article:
Maple Tree Capital, an investment management company, released its Q1 2025 investor letter. A copy of the letter can be downloaded here. Q1 2025 saw a strong start but turned sour due to tariff concerns and macroeconomic fears, leading to a sharp market pullback, with the Nasdaq falling nearly 22% from its highs and the S&P 500 down 20%. Despite the challenges, the firm made significant progress this quarter by averaging in the top-conviction stocks, utilizing covered calls, and exercising patience. Maple’s growth-oriented fund, Jonagold, has become a standout performer, greatly surpassing all major benchmarks since its launch in 2023. While Heartwood is still facing difficulties. Maple Tree Capital’s Jonagold returned -13.64% in Q1 compared to the Nasdaq’s -10.26% return and the Russel 2000’s -9.48% return. Maple Tree Capital’s Heartwood returned -18.04% in Q1 vs. the S&P 500’s -4.27% and the Dow Jones’ -0.87% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Maple Tree Capital highlighted stocks such as Electronic Arts Inc. (NASDAQ:EA). Electronic Arts Inc. (NASDAQ:EA) markets, publishes, and delivers games, content, and services for game consoles, PCs, and mobile phones. The one-month return of Electronic Arts Inc. (NASDAQ:EA) was 1.23%, and its shares have appreciated by 11.93% over the past 52 weeks. On May 28, 2025, Electronic Arts Inc. (NASDAQ:EA) closed at $146.88 per share, with a market capitalization of $36.833 billion.
Maple Tree Capital stated the following regarding Electronic Arts Inc. (NASDAQ:EA) in its Q1 2025 investor letter:
"Electronic Arts Inc. (NASDAQ:EA) trades at a 33x earnings multiple due to heavy R&D spend, yet it trades below 20x free cash flow. This is a disconnect between near-term profitability and long-term value creation. Electronic Arts has consistently invested more in R&D than its peers, positioning itself to lead in the AI-driven future of gaming. While their new game Dragon Age was by all means a “flop” and video game trends softened into the Q1, EA’s position is still extremely strong with their licensing power. It is only a matter of time before an activist stake could help close this valuation gap by pushing for clearer capital allocation, improved communication and a stronger focus on user experience."
Electronic Arts Inc. (NASDAQ:EA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Electronic Arts Inc. (NASDAQ:EA) at the end of the first quarter, which was 45 in the previous quarter. In Q1 2025, Electronic Arts Inc. (NASDAQ:EA) reported net revenue of $1.9 billion, on a GAAP basis, up 7% from Q1 2024. While we acknowledge the potential of Electronic Arts Inc. (NASDAQ:EA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
