Emeth Value Capital, an investment management firm, released its fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. In 2024, the fund returned 28.51% compared to MSCI ACWI’s 16.43% return. Since inception, the fund returned 20.88% compared to 10.65% return for the index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, Emeth Value Capital emphasized stocks such as Vivid Seats Inc. (NASDAQ:SEAT). Vivid Seats Inc. (NASDAQ:SEAT) is an online ticket marketplace that operates in two segments, Marketplace and Resale. The one-month return of Vivid Seats Inc. (NASDAQ:SEAT) was -9.00%, and its shares lost 29.27% of their value over the last 52 weeks. On February 14, 2025, Vivid Seats Inc. (NASDAQ:SEAT) stock closed at $4.35 per share with a market capitalization of $903.691 million.
Emeth Value Capital stated the following regarding Vivid Seats Inc. (NASDAQ:SEAT) in its Q4 2024 investor letter:
“Vivid Seats Inc. (NASDAQ:SEAT) is a leading online ticket marketplace focused on secondary ticketing for concerts, sports, and theater events in the United States. In its earliest form, the company was founded as a ticket broker, launched in 2001 by Jerry Bednyak and Eric Vassilatos during their undergraduate years at the University of Iowa. What began as a side-hustle to pay off student loans proved to be immensely profitable and scalable, so much so that Vivid Seats bootstrapped its own torrid growth for fifteen years before raising its first outside capital from Vista Equity Partners at a $850 million valuation. Today, Vivid Seats holds an approximate twenty percent market share in the U.S. secondary market with $4 billion in annual transaction volume, trailing only StubHub and Ticketmaster, who each generate $5 billion in annual volume. While the company’s valuation today is nearly unchanged from its initial funding round with Vista Equity Partners a decade ago, its gross transaction volume, revenue, and cash flow have all increased by approximately 2.5x over the same timeframe.
The U.S. live event ticketing market is large with a long history of structural growth. More than two hundred million fans attend over three hundred thousand live events in the U.S. annually, figures which have grown consistently. Indeed, according to the Bureau of Economic Analysis, expenditure on live entertainment has increased faster than GDP for thirty-four of the last forty years, and on average has grown at 1.4x the rate of GDP over that period. Moreover, spending on live entertainment has proven to be resilient, with only two years of negative growth over the last four decades. Broadly, the ticketing market can be assessed along two dimensions: (i) primary vs. secondary, and (ii) event category. Primary ticketing companies provide the technology and services that venues need to manage and market shows, sell tickets, and validate tickets for entry. Typically, one primary ticketing company provides these services for all events at a given venue. The chosen primary ticketing company then interfaces with fans during an onsale or presale to market tickets that are the direct inventory of the initial rightsholder, i.e., the venue or the artist. Thus, the actual client of a primary ticketing company is the venue, and primary tickets are both the inventory of and are priced by the initial rightsholder. The largest primary ticketing company by far is Ticketmaster, which has more than a seventy percent market share of primary ticket sales in concerts. In addition, more recently, Seatgeek has made inroads into the primary market, and has had some success in the sports industry. Today, primary tickets account for approximately $45 billion of annual ticket volume in the U.S., and primary ticketing companies earn approximately five to seven percent commissions on each sale. Secondary ticketing companies offer a marketplace to buy and sell event tickets that have already been purchased in the primary market. This ticket inventory is sourced from both individuals and professional sellers, and is priced based on real-time market demand. Primary tickets generally go onsale far in advance of the event date and, as is the case in the sports industry, are often bundled as season ticket packages. Secondary markets give consumers increased flexibility and the ability to attend their desired events without needing to plan months in advance. Tickets can be purchased right up until the time of the event, no package commitments are required, and in many instances tickets are available on the secondary market for below face value, which help teams and artists fill venues. Today, secondary tickets account for approximately $17 billion of annual ticket volume in the U.S., and secondary ticket companies earn approximately twenty percent commissions on each sale…” (Click here to read the full text)
A line of eager ticket buyers outside a theatre on opening night showing the demand for live events.
Vivid Seats Inc. (NASDAQ:SEAT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held Vivid Seats Inc. (NASDAQ:SEAT) at the end of the third quarter which was 24 in the previous quarter. In the third quarter of 2024, Vivid Seats Inc. (NASDAQ:SEAT) delivered $34 million of adjusted EBITDA, which was slightly higher than Q3 2023. While we acknowledge the potential of Vivid Seats Inc. (NASDAQ:SEAT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article we discussed Vivid Seats Inc. (NASDAQ:SEAT) and shared ClearBridge Small Cap Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.