East 72, an investment management firm, published its third-quarter 2022 investor letter – a copy of which can be downloaded here. A quarterly gross portfolio return of -5.7% was recorded by the fund for the third quarter of 2022. After a stunning 8.9% rally in July, the S&P500 saw declines in both August (4.2%) and September (9.3%) to see the key global index some 5.3% lower at quarter-end against June 2022. The index is now back to mid-November 2020 levels. . Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.
In its Q3 2022 investor letter, East 72 Fund mentioned Manchester United plc (NYSE:MANU) and explained its insights for the company. Founded in 1878, Manchester United plc (NYSE:MANU) is an Old Trafford, Stretford-based sports teams and clubs company with a $2.1 billion market capitalization. Manchester United plc (NYSE:MANU) delivered a -6.25% return since the beginning of the year, while its 12-month returns are down by -16.87%. The stock closed at $13.35 per share on October 10, 2022.
Here is what East 72 Fund has to say about Manchester United plc (NYSE:MANU) in its Q3 2022 investor letter:
“So where does this leave the publicly traded MSGS? As we discuss with Manchester United (NYSE:MANU), whilst underpinned by positive economics, owning stock in the team is held back by a family controlled structure and past erratic attitudes towards the team(s). To some extent, the main (only?) investment thesis is a sale of the teams – a factor reflected in the share prices.
MSGS has only 24.77m shares issued trading at $136.66. As we discuss with MANU below, accounting in sports teams is arcane due to deferred revenues sat on the balance sheet often leading to upfront cash and hefty seasonality. Whilst MSGS net debt at $160million is low, on our estimates there is around $320m of negative working capital. Hence, the enterprise value for the two teams is around $3.8billion ($3.3bn equity + $480m “liabilities”). The combined Forbes valuations of the Knicks and Rangers is $7.8billion; if we take our liability figure off this, the debt free figure would be around $7.3billion. With “the Garden” separated, there may be a further discount, but the Forbes values lay 92% above the equity markets’ view. We have a small exposure, bought at very recent prices.”
Photo by Nat Callaghan on Unsplash
Our calculations show that Manchester United plc (NYSE:MANU) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Manchester United plc (NYSE:MANU) was in 16 hedge fund portfolios at the end of the second quarter of 2022, compared to 12 funds in the previous quarter. Manchester United plc (NYSE:MANU) delivered a 27.02% return in the past 3 months.
In March 2022, we also shared another hedge fund’s views on Manchester United plc (NYSE:MANU) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.
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Disclosure: None. This article is originally published at Insider Monkey.
