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Ariel Investments, Bullish with MSG Network’s (MSGN) Future

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Jose Karlo Mari Tottoc
·4 min read
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Ariel Investments, a minority-owned investment company that focuses in small and mid-capitalized US based stocks, published its third-quarter 2020 Investor Letter – a copy of which can be downloaded here. A positive return of 4.56% was recorded by the fund for the 3rd Quarter of 2020, ahead of its Russell 2500 Value benchmark that returned 3.54%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.

Ariel Investments in their Q3 2020 Investor Letter said that they were able to distinguish a value in MSG Networks Inc. (NYSE: MSGN) and is still optimistic in their position in the company. MSG Networks Inc. is a regional sports radio and television entertainment network that currently has a $747.905 million market cap. For the past 3 months, MSGN delivered a huge 42.39% return and settled at $13.10 per share at the closing of January 15th.

Here is what Ariel Investments has to say about MSG Networks Inc. in their Investor Letter:

"Shares of owner and operator of regional sports and entertainment networks, MSG Networks Inc. (MSGN) have also been impacted by the financial and operating implications surrounding the shortened NBA and NHL seasons. Investors have also been concerned about continued subscriber losses across Cable, Telco and Satellite video distributors, which has negative implications for affiliate revenue. On a positive note, the company recently reported fiscal Q4 earnings which exceeded expectations. The results were driven by lower expenses, as MSGN received media licensing relief on the portion of regular season games it did not end up televising. Operating expenses were also lower due to a reduction in advertising and marketing costs, as well as ad sales commissions. Over the long run, we believe MSGN’s rights agreement to broadcast Knicks and Rangers games through 2035 in the largest designated market area (DMA) in the country is valuable. Furthermore, NYC team fan bases are sticky and allegiances are typically passed down from generation to generation. We also highlight that despite ratings pressure across all professional sports leagues, sports content remains the most valuable type of content to advertisers because it is consumed live."

Last December 2020, we published an article telling that MSG Networks Inc. (NYSE: MSGN) was in 25 hedge funds’ portfolio. Its all time high statistics 34. MSG Networks Inc. delivered a -11.13% return YTD.

As of September 2020, Ariel Investments had a 9.9 million share position in MSGN that amounted to $95 million. This made Ariel Investments as the top hedge fund that holds most of MSGN’s stake, followed by Contrarius Investment Management with $40 million worth of MSGN shares, and GAMCO Investors with $16 million. However, our calculations showed that MSG Networks Inc. (NYSE: MSGN) does not belong to the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website.

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