Here’s Why Madison Square Garden (MSGE) Became Ariel Investments’ Top Detractor

·3 min read

Ariel Investments, an investment management firm, published its “Ariel Fund”, “Ariel Appreciation Fund”, “Ariel Focus Fund”, “Ariel International Fund”, and “Ariel Global Fund” first-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 19.50% was recorded by Ariel Fund for the first quarter of 2021, 15.65% by Ariel Appreciation Fund, 16.48% by Ariel Focus Fund, 0.14% by Ariel International Fund, and 3.47% by Ariel Global Fund for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Ariel Investments, in its Q1 2021 investor letter, mentioned Madison Square Garden Entertainment Corp. (NYSE: MSGE), and shared their insights on the company. Madison Square Garden Entertainment Corp. is a New York, New York-based sports holding company that currently has a $2.1 billion market capitalization. Since the beginning of the year, MSGE delivered a -15.05% return, while its 12-month returns are up by 12.62%. As of May 28, 2021, the stock closed at $89.23 per share.

Here is what Ariel Investments has to say about Madison Square Garden Entertainment Corp. in its Q1 2021 investor letter:

"Madison Square Garden Entertainment was the biggest detractor from first quarter performance, declining -22%. After its separation from the MSG sister companies in April of 2020, its share price rose from a low of $58 to a high of $121 on March 12th of this year. Through additional purchases and strong price appreciation, MSGE became our largest holding. Soon after reaching its recent high, MSGE and its former sister company, MSG Networks, Inc. (MSGN) confirmed they were recombining less than a year after both had separated to become standalone companies. The market did not react well and the share prices of both companies fell sharply lower. MSGE will assume the debt of MSGN in the deal which negates our thesis of a pristine MSGE balance sheet. Stay tuned."

Madison Square Garden
Madison Square Garden

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Our calculations show that Madison Square Garden Entertainment Corp. (NYSE: MSGE) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Madison Square Garden Entertainment Corp. was in 23 hedge fund portfolios, compared to 27 funds in the fourth quarter of 2020. MSGE delivered a -17.20% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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