Ariel Investments Sees Bright Future in Madison Square (MSGE)

Ariel Investments, an investment management firm, published its fourth-quarter 2020 ‘Ariel Fund’, ‘Ariel Appreciation Fund’, ‘Ariel Focus Fund’, ‘Ariel International Fund’, and ‘Ariel Global Fund’ Investor Letter – a copy of which can be downloaded here. In the fourth quarter of 2020, a return of 31.56% was recorded by Ariel fund, 23.57% by Ariel Appreciation Fund, 21.62% by Ariel Focus Fund, 8.26% by Ariel International Fund, and 9.80% return by Ariel Global Fund. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Ariel Investments, in their Q4 2020 investor letter, emphasized their Madison Square Garden Entertainment Corp. (NYSE: MSGE) position. Madison Square Garden Entertainment Corp. is a New York-based entertainment company that offers entertainment venues and hosts live events. It currently has a $2.8 billion market capitalization. In the past month, MSGE delivered an 18.44% return, extending its 3-month gains to 47.49%. As of March 8, 2021, the stock closed at $117.61 per share.

Here is what Ariel Investments has to say about Madison Square Garden Entertainment Corp. in their Q4 2020 investor letter:

“Madison Square Garden Entertainment is the perfect example of a company on pause while its world-renowned venues are temporarily shuttered during the pandemic. As a result, the market is suspended in a wait-and-see mode until live entertainment and sporting events return to New York’s famed “Garden” and Radio City Music Hall, as well as the Chicago Theatre and TAO amongst other properties. Until then, the company must deftly manage through a zero-revenue business environment. It does not help that the pandemic’s timing coincided with the construction of the company’s $1.7 billion Sphere—a first-of-its-kind, live music and entertainment venue that seeks to capitalize on an antiquated Las Vegas venue market. After the company split from what became Madison Square Garden Sports, its stock floundered on fears the Sphere’s costs would drain capital. From our perspective, the market had this wrong—especially with the stock roughly trading at the equivalent of its real estate (less corporate expenses) and just over $59 in net cash per share on its balance sheet. MSGE could weather the storm. Going forward, we believe the company will continue to directly benefit from the ongoing shift in consumer preferences from material items to experiences. While the future may not look exactly like the pre-pandemic past, consumer interest in concerts, theatre, sports and other forms of live entertainment should meaningfully recover in a post-vaccine world—as should MSGE’s shares.”

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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 fourth quarter of 2020, Madison Square Garden Entertainment Corp. was in 27 hedge fund portfolios compared to 34 funds in the third quarter. MSGE delivered a 14.03% return YTD.

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