5 Small-Cap Growth Stocks Hedge Funds Love

2. Madison Square Garden Sports Corp. (NYSE:MSGS)

Number of Hedge Fund Shareholders: 40

Hedge fund ownership of Madison Square Garden Sports Corp. (NYSE:MSGS) has gradually trended down over the past three years after peaking at 59 in the first quarter of 2019. It nonetheless ranks second on this list, with John Rogers’ Ariel Investments and Mason Hawkins’ Southeastern Asset Management ranking as some of its most bullish shareholders.

Madison Square Garden Sports Corp. (NYSE:MSGS)’s fiscal Q3 revenue topped estimates at $337.8 million, but earnings widely missed estimates for the second straight quarter, coming in at $1.00. Wolfe Research analyst Peter Supino expects intense competition for customers will drive up acquisition costs and put further pressure on MSGS’s bottom line. He has an ‘Outperform’ rating and $231 price target on the stock.

The aforementioned Ariel Investments published its Ariel Fund & Ariel Appreciation Fund Q3 2021 investor letter last year, in which it had this to say about what makes Madison Square Garden Sports Corp. (NYSE:MSGS) such an attractive proposition:

“In Ariel Fund and Ariel Appreciation Fund, we re-initiated a position in Madison Square Garden Sports Corp (MSGS). As the owner of two storied sports franchises in the biggest U.S. market—the New York Knicks (NBA) and Rangers (NHL)—we believe the company’s scarce and valuable content should continue to grow and command a premium as the economic reopening continues.”