At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Madison Square Garden Entertainment Corp. (NYSE:MSGE) makes for a good investment right now.
Is Madison Square Garden Entertainment Corp. (NYSE:MSGE) a splendid investment today? Hedge funds were reducing their bets on the stock. The number of bullish hedge fund positions were cut by 4 lately. Madison Square Garden Entertainment Corp. (NYSE:MSGE) was in 19 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that MSGE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At the moment there are a multitude of metrics investors can use to appraise publicly traded companies. A duo of the less known metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outpace the market by a healthy amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
John Rogers of Ariel Investments
Keeping this in mind we're going to go over the recent hedge fund action encompassing Madison Square Garden Entertainment Corp. (NYSE:MSGE).
Do Hedge Funds Think MSGE Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in MSGE a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Ariel Investments, managed by John W. Rogers, holds the biggest position in Madison Square Garden Entertainment Corp. (NYSE:MSGE). Ariel Investments has a $269.1 million position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $54.2 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism encompass Robert Emil Zoellner's Alpine Associates, Benjamin A. Smith's Laurion Capital Management and Dmitry Balyasny's Balyasny Asset Management. In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to Madison Square Garden Entertainment Corp. (NYSE:MSGE), around 2.53% of its 13F portfolio. Cumberland Associates / Springowl Associates is also relatively very bullish on the stock, designating 1.67 percent of its 13F equity portfolio to MSGE.
Because Madison Square Garden Entertainment Corp. (NYSE:MSGE) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of money managers who were dropping their full holdings last quarter. It's worth mentioning that Matthew Halbower's Pentwater Capital Management said goodbye to the largest stake of the 750 funds watched by Insider Monkey, valued at close to $5.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund said goodbye to about $3.5 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Madison Square Garden Entertainment Corp. (NYSE:MSGE) but similarly valued. We will take a look at Otter Tail Corporation (NASDAQ:OTTR), Nuvation Bio Inc. (NYSE:NUVB), MFA Financial, Inc. (NYSE:MFA), Velodyne Lidar, Inc. (NASDAQ:VLDR), PROS Holdings, Inc. (NYSE:PRO), Ouster, Inc. (NYSE:OUST), and Deluxe Corporation (NYSE:DLX). This group of stocks' market valuations match MSGE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OTTR,8,58688,-3 NUVB,24,459019,-6 MFA,20,151379,4 VLDR,18,30467,3 PRO,12,265409,0 OUST,14,198923,-5 DLX,11,137242,-1 Average,15.3,185875,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $420 million in MSGE's case. Nuvation Bio Inc. (NYSE:NUVB) is the most popular stock in this table. On the other hand Otter Tail Corporation (NASDAQ:OTTR) is the least popular one with only 8 bullish hedge fund positions. Madison Square Garden Entertainment Corp. (NYSE:MSGE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MSGE is 50.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately MSGE wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MSGE were disappointed as the stock returned -17.2% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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