John Thaler’s JAT Capital has cut significantly its voting stake in The Madison Square Garden Co (NASDAQ:MSG). As a newly amended filing with the Securities and Commission showed, JAT Capital currently owns some 2.81 million class A shares of the company, the activist stake amassing 4.40% of the company’s outstanding class A common stock. Previously, the investor held 5.96 million shares, representing 9.36% of class. In the filing, John Thaler disclosed that he has exposure to an additional 3.8 million shares of MSG’s common stock through cash-settled total return swaps. Thaler also revealed that he shorted 888 thousand shares of the company. Overall, his combined net long economic interest in the company is more than 6 million shares. This is almost unchanged compared to the previous filing in September. Basically, Thaler replaced his voting stake with a non-voting stake and won’t have to disclose future changes in his holdings to the SEC via 13D filings as a result of these transactions.
JAT Capital is a long/short hedge fund. The fund lost around 6% in 2008, but it managed to gain 20%, 11% and 17% respectively in the next three years. However, in 2012, the fund lost 19.2%, which was its worst performing year, although it returned more than 30% in 2013. As of the end of September, JAT Capital held an equity portfolio valued at more than $6.13 billion primarily divided among Services and Technology stocks. Over the first three quarters of last year, the fund has been bullish on Twitter Inc (NYSE:TWTR), raising its stake to 9.96 million shares held at the end of September, from 1.36 million shares held initially at the end of March. Meanwhile, the stock of Twitter fell by some 29% over the last 52 weeks. Moreover, also at the end of the third quarter, The Madison Square Garden Co (NASDAQ:MSG) has been the second-largest position in JAT Capital’s 13F portfolio, after the fund raised its stake by more than 200% over the quarter. On the third spot stands Yahoo! Inc. (NASDAQ:YHOO), on which JAT Capital has been bullish throughout the first three quarters of 2014 disclosing ownership of 8.85 million shares as of the end of September, while the stock grew by over 20% over the last year.
Mr. Thaler’s fund has been holding shares The Madison Square Garden Co (NASDAQ:MSG) since the end of 2012 when it disclosed ownership of 733,700 shares. Over the following years the fund has considerably raised its exposure to the stock, and last year it also changed its stake to activist from passive and said that they want to engage in constructive discussions with the company’s management and board of directors in order to provide recommendations for increasing the value of the company. In addition, Mr. Thaler said that the stock was undervalued, but he also assured that he does not intend to acquire a controlling interest in the company, nor push for a merger or sale of Madison Square Garden.
Overall, since JAT Capital initiated a stake in the company, the stock of The Madison Square Garden Co (NASDAQ:MSG) appreciated by around 70%, while since the fund went activist on the company, the share price went up by 13%. However, the investor has not disclosed any details regarding its discussions with the company prior to cutting down its position.
The Madison Square Garden Co (NASDAQ:MSG) is a $5.76 billion holding company that is an integrated sports, entertainment and media business company conducting its operations through several direct and indirect subsidiaries. Analysts currently have a consens ‘Hold’ rating for the stock, while the average price target amounts to $71.80 per share, which is below the current price of the stock. Moreover, in November 2014, Morgan Stanley downgeaded the stock to ‘Equal Weight’ from ‘Overweight’ and reduced the price target to $70.00 from $80.00, while earlier that same month, JPMorgan raised the price target to $75.00 from $70.00 with ‘Neutral’ rating.
In addition, The Madison Square Garden Co (NASDAQ:MSG) has witnessed a slight increase in bullish sentiment among investors. As our data show, in the previous round of 13F filings, 28 funds among those that we track disclosed long equity positions in the company. Even though the number of funds holding the stock fell from 29 in the previous quarter, the aggregate value of the positions held by the funds tracked by us went up by $329.38 million to $1.72 billion.
Among other shareholders of The Madison Square Garden Co (NASDAQ:MSG) is Kenneth Mario Garschina‘s Mason Capital Management, which initiated a stake with 5.18 million shares during the third quarter of 2014. It is followed by Christian Leone‘s Luxor Capital Group, which held 3.21 million shares at the end of September, down by 35% on the quarter.
Disclosure: none
