Here’s Why Jackson Peak Capital is Excited About Endeavor Group (EDR)
Jackson Peak Capital, an investment management firm, released its third quarter 2023 investor letter, a copy of which can be downloaded here. Jackson Peak performed exceptionally well in Q3, delivering a robust +11.8% return. Despite the challenging market conditions, Jackson Peak's alternative, long-short investment strategy proved successful, securing notable wins in each segment of the portfolio—core longs, special situations, and alpha shorts. Additionally, the portfolio received a smaller yet beneficial boost from reducing net exposure and implementing macro hedges in anticipation of an increase in long-term interest rates, a move that paid off as long-term interest rates rose and equity indices declined. Take a moment to review the fund's top 5 holdings to gain insights into their primary investment choices for 2023.
In its Q3 2023 investor letter, Jackson Peak Capital mentioned Endeavor Group Holdings, Inc. (NYSE:EDR) and explained its insights for the company. Endeavor Group Holdings, Inc. (NYSE:EDR) is a Beverly Hills, California-based holding company with a $7.3 billion market capitalization. Endeavor Group Holdings, Inc. (NYSE:EDR) delivered a 8.34% return since the beginning of the year, while its 12-month returns are up by 14.54%. The stock closed at $24.42 per share on November 17, 2023.
Here is what Jackson Peak Capital has to say about Endeavor Group Holdings, Inc. (NYSE:EDR) in its Q3 2023 investor letter:
"A position that we scaled up post-9/30/2023 that we are excited about is Endeavor. We’ve been following the business over the past year and participated in the Endeavor/WWE merger arb. Endeavor is a holding company comprised of media (UFC, WWE, PBR, EuroLeague), talent representation, events/media rights and sports betting assets. Endeavor has been chronically undervalued as a public company, likely due to the discount applied for complexity relating to the holding company. In October, the company announced it was commencing a review of strategic alternatives to maximize value for shareholders. Later the same day, the private equity firm Silver Lake, who controls approximately 71% of the voting power of Endeavor, announced they were working toward a proposal to take Endeavor private. It's our belief that an opportunistic acquisition by Silver Lake is the most likely outcome as they can acquire an undervalued asset that they know well that’s not being appreciated in the public market and act as a private company to realize value for their investors. What makes this an exciting opportunity for Jackson Peak is the downside protection offered by a credible potential takeout bid on an already undervalued business and the near-term upside if the strategic alternatives process unfolds as we think it can - combining the aspects of a fundamental long and event-driven investment into one.
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Our calculations show that Endeavor Group Holdings, Inc. (NYSE:EDR) does not belong on our list of the 30 Most Popular Stocks Among Hedge Funds. We also mentioned Endeavor Group Holdings, Inc. (NYSE:EDR) in another article. Endeavor Group Holdings, Inc. (NYSE:EDR) was in 49 hedge fund portfolios at the end of the second quarter of 2023, compared to 52 funds in the previous quarter. Endeavor Group Holdings, Inc. (NYSE:EDR) delivered a -0.41% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q3 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
