Do Hedge Funds Love Madison Square Garden Entertainment Corp. (MSGE)?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Madison Square Garden Entertainment Corp. (NYSE:MSGE).

Madison Square Garden Entertainment Corp. (NYSE:MSGE) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Madison Square Garden Entertainment Corp. (NYSE:MSGE) was in 23 hedge funds’ portfolios at the end of the first 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 Q1 rankings).

To the average investor there are numerous metrics stock traders can use to appraise publicly traded companies. A couple of the most innovative metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outperform the S&P 500 by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding Madison Square Garden Entertainment Corp. (NYSE:MSGE).

Do Hedge Funds Think MSGE Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in MSGE over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled 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 $210.9 million position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $51.8 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism contain Benjamin A. Smith’s Laurion Capital Management, Frederick DiSanto’s Ancora Advisors and Israel Englander’s Millennium 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 2.08% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 0.45 percent of its 13F equity portfolio to MSGE.

Since Madison Square Garden Entertainment Corp. (NYSE:MSGE) has experienced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely last quarter. Intriguingly, Jeffrey Tannenbaum’s Fir Tree sold off the biggest investment of the 750 funds followed by Insider Monkey, valued at about $61.3 million in stock. Seth Fischer’s fund, Oasis Management, also sold off its stock, about $11.8 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Madison Square Garden Entertainment Corp. (NYSE:MSGE). These stocks are Burford Capital Limited (NYSE:BUR), La-Z-Boy Incorporated (NYSE:LZB), Columbia Property Trust Inc (NYSE:CXP), Goldman Sachs BDC, Inc. (NYSE:GSBD), American Assets Trust, Inc (NYSE:AAT), Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY), and InterDigital, Inc. (NASDAQ:IDCC). This group of stocks’ market valuations are closest to MSGE’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BUR 6 30046 -1
LZB 24 110904 11
CXP 12 62630 -1
GSBD 5 5208 3
AAT 12 19323 -2
SNCY 20 173113 20
IDCC 15 273221 -3
Average 13.4 96349 3.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $325 million in MSGE’s case. La-Z-Boy Incorporated (NYSE:LZB) is the most popular stock in this table. On the other hand Goldman Sachs BDC, Inc. (NYSE:GSBD) is the least popular one with only 5 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 66.5. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 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 -9.6% since the end of March (through 7/16) 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.