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Value creation is hard to come by, especially during ‘The Great Pause of 2020’ thanks to Covid-19. But what if your average investor knew how to tap into the brains of the most prolific and successful financial geniuses alive today?
Now you can as The Edge (the leading source in under-performing companies for activist involvement, Special Situations and Spinoffs) have crafted the perfect solution: revealing a bespoke study which unmasks the King of the Activists, available on request.
The Edge’s research into the ten major US activist players was designed to give insights into each of their annual campaigns, as far back as 15 years ago, to ascertain if their actions resulted in value creation for shareholders. The research firm probed each activist’s overall performance in terms of market caps and sectors against the relevant comparable indices over time.
Madison Square Garden Spun Off Its Sport And Entertainment Businesses; Here’s Why Both Stocks Are Undervalued, Investors Say
Featured on Forbes – Article by Sergei Klebnikov: “With Madison Square Garden successfully completing the separation of its sports and entertainment businesses last month, the spinoff created two separate stocks that are both currently undervalued, according to market experts.
“Last month, the Madison Square Garden Company completed the spinoff of MSG Entertainment (which operates Madison Square Garden and other venues) and renamed itself MSG Sports (which owns the New York Rangers and New York Knicks sports teams). Investors say that the spinoff has created a big opportunity.
“’Long term, these are great stocks with enormous value,’ says Jim Osman, CEO of The Edge Consulting Group, who doesn’t own direct stakes in either stock. At current market prices, he says, MSGS is trading at about a 30% discount to its net asset-based valuation while MSGE is trading at a nearly 50% discount.
One reason investors are optimistic: The Sphere, a 17,500-capacity stadium in Las Vegas. Although construction has been delayed and the opening has been pushed beyond 2021 because of coronavirus shutdowns, the new venue is fully funded and ‘will unlock a new revenue stream’ for MSGE, Osman says.”
When Sachem Head Capital Management enters a new position, the stock normally doubles in two years. That was the largest return among 10 major activist investors, The Edge Consulting Group, a special situations research firm, told clients this week.
A disastrous outlook for 2020 earnings is likely to put increased emphasis on value investing, said The Edge Chief Executive Officer Jim Osman. “Investors should look at catalyst investing going forward because, for the next few quarters, earnings are basically unknown,” he said in an interview. “So how are you buying any stock right now on the basis of earnings? Activism, spinoffs, anything that is going to move the stock without relying on the earnings per se.”
US President Donald Trump’s fury with China’s 5G security trickery will be laid bare in September after a deadline contained in the Secure 5G and Beyond Act of 2020 expires. By September 20, a big reveal of US security threats and vulnerabilities will be exposed as China continues to dominate the global 5G landscape.
That’s why The Edge believes that an activist should move in to dominate and improve Nokia (NYSE: NOK) before private equity gets its hands on the Finnish firm in a hostile takeover bid.
Investors should buy shares of the newly spun-off Madison Square Garden Entertainment, which is currently trading at “a huge 60% discount to its net asset-based valuation,” according to The Edge Consulting Group.
Considering MSGE’s expected net cash balance of $1.3b after the sale of The Forum by the end of the current quarter, the market seems to be assigning just $300m to its assets, The Edge said in a note to clients. The research firm expects MSGE to have a “manageable debt load” of $120m post-FY22.
Meanwhile, Madison Square Garden Sports (MSGS) is trading at a 25% discount to the value of its Knicks and Rangers sports teams, and The Edge sees “room to reduce this valuation gap in the next year when things likely become normalized after the current coronavirus-related league suspension”
-Note on Bloomberg by Drew Singer
When Gilead Sciences, Inc.’s CEO Daniel O’Day pushed the button on his March 28 open letter stating the firm’s new wonder-drug (the antiviral Remdesivir) could work against COVID-19, he had every hope the company’s share price would soar – and he was right. The fact that Gilead donated around 140,000 treatment courses to expedite its possible emergence into America’s emergency response offered a much needed boost, and the company is now going full-steam ahead with the experimental drug’s pandemic PR strategy, thanks to a previous report in the New England Medical Journal.
The report revealed that 36 of 53 patients hospitalized for severe COVID-19 who were treated with compassionate-use Remdesivir had clinical improvement. Gilead’s shares surged by more than 8% in early trading on Friday, after details leaked of a closely watched clinical trial of the company’s antiviral drug Remdesivir, showing what appears to be promising results in treating COVID-19. Gilead have yet to comment.
Madison Square Garden Co.’s combined financials are likely to take a near-term hit due to the ban on large public gatherings and the suspension of the NBA season, but its history of value-creating splits bodes well for the coming spin off of its entertainment business from its sports team franchise over the longer-term, analysts said. The split — its fourth in a decade — will create Madison Square Garden Entertainment Corp., retaining the Garden as well as the Las Vegas Sphere. The leftover business will be renamed Madison Square Garden Sports Corp., the first publicly listed company of its kind with a portfolio of high-value teams including the New York Knicks and the New York Rangers.
MSG’s hiring of industry veteran Jennifer Vogt, a former executive at Walt Disney Co., signaled “management’s efforts to ensure the successful launch of MSG Sphere in 2021, which will potentially boost the top line of MSGE,” analysts at The Edge Consulting Group wrote in a note to clients. “MSGS will be an ever-increasing valuation story with its trophy assets in play, particularly due to the brand value and limited supply of sports teams”
The coronavirus pandemic is already being predicted to be responsible for 20 million US job losses and, with trillions wiped off global stocks resulting in more than 35 percent market declines, it is getting hard to stay positive. But remember: everything comes in cycles, and when things get tough and the beacons of hope seem few and far between, there are always a few great leaders out there we can trust, and they don’t get much better than Warren Buffett.
Mr. Buffett, who is 90 in August, has seen more than the majority of investors, and that’s why The Edge (who source under-performing companies for activist involvement, Special Situations and Spinoffs) believes investors should take a leaf out of Warren’s playbook: keep calm and find value from the wreckage.
The coronavirus outbreak has sadly led to the closure of many companies across the nation, leaving lots of small business owners fearing for their livelihood. This was the case for 40-year-old Neil Bharadwa, owner of the Cambridge Fruit Company.
Having opened in 2005, Neil has made a successful living supplying fresh fruit and vegetable boxes to offices across the city, but with many businesses asking their employees to work from home, Neil saw his business disappear, almost overnight. With the kindness of a New York businessman, and Neil’s determination to remodel his business, no one could have predicted the amazing generosity that has meant he is now busier than ever.
Jim Osman, the founder of The Edge, sees juicy opportunities arising from the coronavirus-induced market plunge. In an exclusive interview with Business Insider, Osman relayed three stock picks that have “at least 50% upside from where they are.” He says “any good investor won’t keep pushing the same old narrative.”
When we last left off with Jim back in January, he was sniffing around for stock-specific, catalyst-driven events that would push issues higher in what he saw as a fully-valued market. But that was before a global pandemic took hold.
Today, with the proliferation of the coronavirus, Osman’s pivoted his strategy to best take advantage of the fallout — and he’s seeing plenty of opportunities. For his 200-plus clients — who have total assets managed of $400 billion — that’s good news.