Broyhill Asset Management, a boutique investment firm, released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. The portfolio gained 1.3% net of fees and expenses in 2022 compared to a -18% return for the MSCI World Index. The portfolio compounded at 12.3% annually net of fees and expenses, since inception. In addition, check the fund’s top five holdings to know its best picks in 2022.
Broyhill Asset Management highlighted stocks like Madison Square Garden Entertainment Corp. (NYSE:MSGE) in the Q4 2022 investor letter. Based in New York, New York, Madison Square Garden Entertainment Corp. (NYSE:MSGE) is an entertainment company. On March 17, 2023, Madison Square Garden Entertainment Corp. (NYSE:MSGE) stock closed at $53.90 per share. One-month return of Madison Square Garden Entertainment Corp. (NYSE:MSGE) was -12.30%, and its shares lost 32.45% of their value over the last 52 weeks. Madison Square Garden Entertainment Corp. (NYSE:MSGE) has a market capitalization of $1.916 billion.
Broyhill Asset Management made the following comment about Madison Square Garden Entertainment Corp. (NYSE:MSGE) in its Q4 2022 investor letter:
“Shares of Madison Square Garden Entertainment Corp. (NYSE:MSGE) declined 38% for the twelve months ending December 2022. Since establishing the position, we have shared our thoughts on the business and the rationale for our investment on four separate occasions, including this one. In every single one of those instances, that writing appeared here, as one of the portfolio’s top detractors. The only positive thing that we can say about our investment at this point is that we no longer own it. As market volatility accelerated during the year, we re-underwrote every position in the portfolio with an aim towards measuring and testing our conviction. We scrutizined every assumption behind every investment with a single goal – to eliminate lower conviction positions and increasingly concentrate our capital in those investments where we had the greatest conviction and a narrower range of outcomes (particularly to the downside). Dolan and MSG missed the mark on both counts.
So where did we go wrong? We could point to a dozen factors, but I think it really boils down to two. First, our initial thesis rested largely on the value of MSGE’s irreplaceable, prime asset -The Garden. We believed that investor enthusiasm for “reopening” would close the gap between public and private value, but failed to recognize that once this enthusiasm dissipated, the stock lacked any real catalyst for getting paid. Equally important, while we identified management as a risk at the outset, the “Dolan Discount” lived up to its reputation. First buying MSGN to fund his pet project in Vegas, pissing off both groups of shareholders, then spinning it back out to “clarify” the story. Many investors are hesitant to sell positions held at a loss. It makes sense intuitively, as doing so repeatedly makes it difficult to generate gains. That said, I firmly believe that there is tremendous value in freeing up mental bandwidth, allowing the team to shift their energy to more constructive situations. It’s difficult (or impossible) to quantify, but the benefits are real. There’s just something to be said about maintaining enthusiasm for the portfolio, and stale positions just eat up limited resources, better applied to fresh names and fresh analysis. This is also why a 3-5 year hold is typical for the portfolio.”
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Madison Square Garden Entertainment Corp. (NYSE:MSGE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Madison Square Garden Entertainment Corp. (NYSE:MSGE) at the end of the fourth quarter which was 17 in the previous quarter.
We discussed Madison Square Garden Entertainment Corp. (NYSE:MSGE) in another article and shared Black Bear Value Partners’ views on the company. In addition, please check out our hedge fund investor letters Q4 2022 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.
