We recently published a list of Mario Gabelli’s stock portfolio, “The 10 Best Stocks to Buy,” and in this article we’ll take a look at how Madison Square Garden Sports Corporation (NYSE:MSGS) stands against other Mario Gabelli-endorsed stocks.
GAMCO Investors, Inc. (formerly Gabelli Asset Management Company) is a prominent American company headquartered in Rye, New York. The company specializes in providing investment advisory and brokerage services to mutual funds, institutional investors, and specialized investors. The company was founded and is majority owned by Mario Gabelli, who has earned over $750 million in compensation over the past few years.
Veteran investor Mario Gabelli has made millions betting on unpopular stocks. He likes to invest in companies that aren’t on the radar or covered by Wall Street analysts. If the company isn’t part of an index, it becomes even more attractive.
This hedge fund manager remains committed to active value investing. His investment philosophy of emphasizing value stocks over growth stocks was consistent even during a time when the US Federal Reserve’s easy interest rate policy allowed passive index funds and the Nasdaq “FAANG” stocks to dominate the market. His investment secret is simple: “Find good companies with good management, buy the shares at the right price, and hold the shares for the long term.”
According to Insider Monkey’s Q2 2024 database, industrial products account for approximately 21.7% of the total investment portfolio.
Gabelli Fund predicts the future of the U.S. stock market
Gabelli Funds expects the US presidential elections to increase market volatility in the second half of 2024. At the same time, the interest rate cuts scheduled for September could encourage rotation into market areas that have been underperforming this year. The investment management firm sees the elections as increasing volatility. However, economic weakness and volatility are expected to be offset by fundamental rotation and low interest rates.
Gabelli seems optimistic about the U.S. economy in general. He thinks corporate cash flows are healthy and gross margins are improving. The only thing that could weigh on U.S. stocks is geopolitical risk.
Gabelli recently appeared at the prestigious Barron’s Roundtable. He expects global GDP, as measured by the International Monetary Fund, to reach about $115 trillion in 2025. The United States will account for 26% and China will account for 17%. Consumer spending accounts for about 70% of the U.S. economy, while industrial spending accounts for about 12%.
The story continues
Mario Gabelli said the Fed is focused on the four R’s. First, “keeping interest rates higher for longer.” Second, “the continued reduction of the central bank’s balance sheet,” currently proceeding at a pace of $60 billion per month, down from about $95 billion at the start of 2024. Second, the Fed continues to make efforts to “reduce aggregate demand,” but rising government spending continues to offset these efforts. Finally, the chairman continues his “rhetoric of keeping inflation down.”
Mergers and acquisitions (M&A) and other financial engineering strategies are expected to increase significantly for a variety of reasons. Gabelli believes that several private equity funds are reaching the end of their 10-year life cycles and limited partners (LPs) need liquidity. This situation will therefore lead to increased turnover. Mario Gabelli expects M&A to increase globally in the second half of 2024.
While the S&P 500 is up more than 15% year to date, veteran investors believe stocks will compound at about 8% annual growth rate over the next few years, significantly outpacing returns from bonds.
Mario Gabelli is optimistic about these areas.
Mario Gabelli is apparently interested in sports franchises because sports will continue to dominate linear television and streaming, with media companies rumored to be spending big on broadcast and streaming rights.
Moreover, the veteran hedge fund manager, like other market professionals, believes that artificial intelligence is a great technology.
Gabelli’s next pick is natural gas, which he believes has great potential for prices to rise over the next few years as some producers shut in wells or cut production and demand continues to grow relative to power generation and liquefied natural gas exports.
At Insider Monkey, we stick to stocks that hedge funds concentrate their investments in. The reason is simple: our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter, and has returned 275% since May 2014, beating the benchmark by 150 percentage points (more details here).
Is Madison Square Garden Sports Corporation (NYSE:MSGS) the best stock to buy from Mario Gabelli’s stock portfolio?
A look backstage at the Madison Square Garden Training Center.
Madison Square Garden Sports Corporation (NYSE:MSGS)
GAMCO Investor Equity Value: $111.7 million
GAMCO Investors 13F Portfolio Percentage: 1.21%
Number of hedge fund holders: 36
Madison Square Garden Sports Corporation (NYSE:MSGS) is engaged in the live sports and entertainment business. Its reportable segment, MSG Entertainment, includes live entertainment events such as concerts and other live events such as family shows, performing arts, and special events.
The company owns the New York Knicks basketball team and the New York Rangers hockey team, and is a vehicle for giving the public access to the lucrative dynamics of sports franchises.
Despite COVID-19, team values continue to rise along with basketball’s global popularity, and the Knicks are improving on the court with young players and healthy draft capital, which could lead to even more fan engagement and increased pricing power for years to come.
Strong demand for tickets and new sponsorship deals are expected to provide a boost for the company.
Premium hospitality sales and playoff-related revenue should drive the company’s financials over the next few quarters, while the value of the team should help the company navigate challenges (such as a changing sports media environment). Madison Square Garden Sports Corp. (NYSE:MSGS) is also open to strategic financial decisions, such as selling a minority stake.
The company expects growth to come from premium hospitality renewals and new sales, as well as plans to expand club space at The Garden and renovate suites.
Madison Square Garden Sports Corporation (NYSE: MSGS) is on track to surpass $1 billion in revenue for fiscal year 2024, up 16% from the prior year. The performance was fueled by strong demand from both the Knicks and Rangers, who both performed well in the regular season and made the playoffs.
The average target price for Madison Square Garden Sports Corporation (NYSE:MSGS) shares is $227.50. As of the end of the second quarter of 2024, 36 hedge funds tracked by Insider Monkey reported holdings in Madison Square Garden Sports Corporation (NYSE:MSGS).
Overall, MSGS ranks #10 on our list of best stocks to buy, according to Mario Gabelli. While we acknowledge the potential of MSGS as an investment, our conviction is based on the belief that some significantly undervalued AI stocks have a better chance of delivering higher returns in a shorter time frame. If you’re looking for significantly undervalued AI stocks that are more promising than MSGS but still trade at less than five times earnings, check out our report on the cheapest AI stocks.
Read next: The $30 Trillion Opportunity: The 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and NVIDIA Has “Become a Wasteland” According to Jim Cramer.
Disclosures: None. This article was originally published on Insider Monkey.