Should You Expect Accelerated Sales Growth for Mattel (MAT) in 2026?

Longleaf Partners, managed by Southeastern Asset Management, released its “Partners Fund” third-quarter 2025 investor letter. The letter is available for download here. The fund returned -0.33% in the third quarter, compared to the S&P 500’s 8.12 % return and the Russell 1000 Value’s 5.33% return. The firm is not happy with the flat performance of the portfolio, emphasizing its investments in real assets and brands that generate growing free cash flow (FCF) per share. Despite facing market pressures from speculation and government uncertainty, it anticipates that the Fund's ~10x FCF multiple could rise to the mid-teens as management implements strategies to improve margins and increase share repurchases. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Longleaf Partners Fund highlighted stocks such as Mattel, Inc. (NASDAQ:MAT). Mattel, Inc. (NASDAQ:MAT) is a toy and family entertainment company. The one-month return of Mattel, Inc. (NASDAQ:MAT) was 13.49%, and its shares gained 0.95% of their value over the last 52 weeks. On October 23, 2025, Mattel, Inc. (NASDAQ:MAT) stock closed at $19.18 per share, with a market capitalization of $6.18 billion.

Longleaf Partners Fund stated the following regarding Mattel, Inc. (NASDAQ:MAT) in its third quarter 2025 investor letter:

"Mattel, Inc. (NASDAQ:MAT) - Children’s toy, media, and consumer products creator Mattel was a detractor for the quarter. Second quarter sales were below expectations as North American retailers adjusted ordering to domestic shipping vs. importing directly. This was to buy time to see if tariff rates abated, which resulted in a two-month lag in sales recognition. This resulted in North American sales down 16% while international segment sales increased 7%. Point-of-sale sell through at retailers was positive for Q2 and YTD showing healthy underlying demand as toys are somewhat non-discretionary. Mattel continues to execute operationally with improved gross margins even with lower-than expected sales. While we believe 2025 will show overall modest sales growth, 2026 should accelerate given two new movies and at least one new digital game being launched in addition to a solid partner movie slate where Mattel produces related toys. In the interim, management is using almost all its FCF to repurchase shares at depressed prices. They plan to repurchase $340 million in 2H25 which equates to over 5% of shares outstanding."

Mattel, Inc. (NASDAQ:MAT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 33 hedge fund portfolios held Mattel, Inc. (NASDAQ:MAT) at the end of the second quarter, up from 29 in the previous quarter. In the third quarter of fiscal 2025, Mattel, Inc.'s (NASDAQ:MAT) net sales decreased 6% as reported and 7% in constant currency to $1.74 billion. While we acknowledge the potential of Mattel, Inc. (NASDAQ:MAT) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Mattel, Inc. (NASDAQ:MAT) and shared the list of top NASDAQ stocks with low P/E ratios. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.