Madison Square Garden Sports Corp. (MSGS): A Bull Case Theory

We came across a bullish thesis on Madison Square Garden Sports Corp. (MSGS) on Boyar Research’s Substack by Boyar Research and Jonathan Boyar. In this article, we will summarize the bulls’ thesis on MSGS. MSGS Technologies, Inc.’s share was trading at $208.32 as of Sept 26th. MSGS’s trailing and forward P/E were 85.38 and 72.46 respectively according to Yahoo Finance.

A view from behind the scenes showing the Madison Square Garden Training Center.

Madison Square Garden Sports Corp. (MSGS) owns two famous sports teams: the New York Knicks (NBA) and the New York Rangers (NHL). Forbes values the Knicks at $6.6 billion and the Rangers at $2.65 billion. Despite these high valuations, MSGS’s total value is around $5 billion, showing a big valuation discrepancy. The Dolan family, which controls MSGS, has been criticized for not closing this gap, leading to a “Dolan discount” on the company’s shares.

The growing interest from institutional investors in owning sports franchises is increasing their value due to the scarcity of major sports teams and the favorable tax benefits associated with owning them, making these teams more desirable as assets. Also, recent changes in NBA ownership rules let institutional investors hold passive stakes which is being done by private equity firms like Arctos Sports Partners and Dyal Capital Partners. Also, the rising value of sports media rights is reshaping the industry because the craze for live sports content has led to higher media rights deals.

Thus, investing in MSGS could be a good opportunity as the combined value of the Knicks and Rangers is much higher than MSGS’s current market value. The above catalyst can encourage MSGS to take the following action to unlock value: selling minority stakes or even outright sales of either the Knicks or Rangers. The Dolan family could spin-offs the Knicks and Rangers into individual publicly traded entities to further reveal hidden value.

Madison Square Garden Sports Corp. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held MSGS at the end of the second quarter which was 36 in the previous quarter. While we acknowledge the risk and potential of MSGS as an investment, our conviction lies in the belief that some 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 more promising than MSGS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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