Is MSGE Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Madison Square Garden Entertainment Corp. (NYSE:MSGE).

Is MSGE stock a buy? Madison Square Garden Entertainment Corp. (NYSE:MSGE) investors should be aware of a decrease in hedge fund sentiment in recent months. Madison Square Garden Entertainment Corp. (NYSE:MSGE) was in 27 hedge funds’ portfolios at the end of December. The all time high for this statistic is 38. Our calculations also showed that MSGE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Keeping this in mind we’re going to analyze the key hedge fund action regarding Madison Square Garden Entertainment Corp. (NYSE:MSGE).

Do Hedge Funds Think MSGE Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MSGE over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Ariel Investments held the most valuable stake in Madison Square Garden Entertainment Corp. (NYSE:MSGE), which was worth $221.4 million at the end of the fourth quarter. On the second spot was GAMCO Investors which amassed $65.3 million worth of shares. Fir Tree, Laurion Capital Management, and Oasis Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fir Tree allocated the biggest weight to Madison Square Garden Entertainment Corp. (NYSE:MSGE), around 2.97% of its 13F portfolio. Lionstone Capital Management is also relatively very bullish on the stock, designating 2.77 percent of its 13F equity portfolio to MSGE.

Seeing as Madison Square Garden Entertainment Corp. (NYSE:MSGE) has faced falling interest from the entirety of the hedge funds we track, we can see that there were a few money managers that decided to sell off their full holdings heading into Q1. Intriguingly, Jim Davidson, Dave Roux and Glenn Hutchins’s Silver Lake Partners sold off the largest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $101.2 million in stock, and John Khoury’s Long Pond Capital was right behind this move, as the fund dropped about $17.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 7 funds heading into Q1.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Madison Square Garden Entertainment Corp. (NYSE:MSGE) but similarly valued. These stocks are Kennedy-Wilson Holdings Inc (NYSE:KW), MGE Energy, Inc. (NASDAQ:MGEE), SINA Corp (NASDAQ:SINA), ABM Industries, Inc. (NYSE:ABM), Coeur Mining, Inc. (NYSE:CDE), Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB), and Primo Water Corporation (NYSE:PRMW). This group of stocks’ market caps resemble MSGE’s market cap.

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As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $453 million in MSGE’s case. Primo Water Corporation (NYSE:PRMW) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB) is the least popular one with only 5 bullish hedge fund positions. Madison Square Garden Entertainment Corp. (NYSE:MSGE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MSGE is 60.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately MSGE wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on MSGE were disappointed as the stock returned -17.3% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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