Madison Square Garden Co. (NYSE: MSG) seems to be a pretty good bet according to Samantha Greenberg of Margate Capital, who presented the stock at the Robin Hood Conference recently.
Margate Capital is a $200 million fund founded last year by Greenberg, who happens to have been a former partner for the prestigious Paulson & Co. She is also one of the few prominent head fund managers in the business. Meanwhile Madison Square Garden Co. (NYSE: MSG) is a sports conglomerate with stakes in major New York franchises such as the New Rangers and New York Knicks. Hedge funds Long Pond Capital, YG Partners, and Steamboat Capital Partners were bullish about the stock recently. Scopus Asset Management, billionaire Steven Cohen, and Atalan Capital initiated brand new positions in the stock during the second quarter.
Given that the rich are getting richer, and new billionaires are seemingly popping up per day (well around 10% CAGR), demand for iconic sports franchises could grow, a bullish dynamic for Madison Square Garden. In addition, NBA franchises could see more demand from wealthy Chinese buyers given how in demand basketball is in that country. Investing in sports has been a pretty good bet in the past, as the valuation of sports teams domestically have skyrocketed by around 20% per year for the last five years. If sports spending increases due to online tech giants spending more for streaming sports content, the value of sports franchises could receive a further boost, although such an outcome isn’t guaranteed.
In terms her price target, Greenberg believes Madison Square Garden Co. (NYSE: MSG) could rise to as high as $291, giving shareholders 36% upside at current prices. As for some catalysts, one potential one could be a potential buyout of Madison Square Garden by the Dolans, who already own 22% of MSG and the majority of the stock’s voting shares. Spinning off assets could also potentially unlock value. Madison Square Garden shares have done well so far, rising 24.89% year to date. They have also risen 31% in the past four quarters. Those numbers soundly beat the S&P 500’s performance. Needless to say, Madison Square Garden Co. (NYSE: MSG) offer more than entertainment if Margate’s thesis comes true.
