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Trading In The Land Of Misfit Toys

On Monday, Disney (DIS) said it will independently test toys featuring its characters.  Also Monday, Disney and Toys R Us increased its safety checks in stores following the numerous Mattel recalls this summer Are we setting up for a Christmas toy sales disaster?

CNBC's Brian Shactman has been covering this story and spoke to Kevin Farr, the CFO of Mattel at an industry conference Monday in New York. He joins the panel for this conversation. Here are excerpts.

Brian explains that Mattel’s CFO made 3 major points:

- Mattel is still adding up the cost of the 3rd recall and might take charges through all of ‘07.

- Mattel revamped the way they inspect things.

- Mattel fully intends to get toys onto shelves in time for Christmas.

Dylan Ratigan asks if Disney is vulnerable to the same problem?

Brian explains that Disney and Toys R Us are now issuing safety checks though he feels it’s more for PR purposes.

Jeff Macke put together a “Christmas Scare” basket of stocks. He recommends getting short Mattel (MAT) and getting long: Disney (DIS), Hasbro (HAS), Nintendo (NTDOY), and Scholastic (SCHL).

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Trader disclosure: On Sept. 10, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;
Make Owns (ATVI), (DIS), (INTC), (HAS); (EMC), Najarian Owns (VMW); Najarian Is Short (GS); Finerman's Firm Owns (COP); Finerman's Firm Owns S&P 500 Futures; Finerman's Firm Owns Russell 2000 Futures