HEDGE FUND PITCH: The company that owns the Knicks, Rangers and Rockettes could pop 40%

  • Samantha Greenberg, a former partner at Paulson & Co. who started hedge fund Margate Capital last year, pitched Madison Square Group at the Robin Hood Conference on Thursday.
  • Greenberg said MSG has a 38% upside, and could trade up to $US291 a share. It currently trades around $US211.
  • Greenberg touted the growing number of billionaires — who may in turn buy more sports teams — as a bullish sign for MSG.

The founder of a fresh hedge fund launch pitched the Madison Square Garden Company to a high-profile Wall Street investor conference on Thursday.

Samantha Greenberg, founder of $US200 million Margate Capital and a former partner at Paulson & Co., pitched the sports and events company at the Robin Hood Investors Conference in New York, according to people familiar with the matter.

The stock, which currently trades around $US211, could jump to $US291, a 38% upside, Greenberg said in her presentation.

Madison Square Garden owns a slew of iconic assets — such as sports teams New York Knicks and the New York Rangers, the Manhattan-based arena Madison Square Garden and the Rockettes. Still, the stock trades at a 43% discount to its fair market value and to competitors, Greenberg said.

The Robin Hood event was set to host some of Wall Street’s most well-known investors, including Third Point’s Dan Loeb, Baupost’s Seth Klarman, Saba Capital’s Boaz Weinstein, JP Morgan’s Mary Erdoes, JANA’s Barry Rosenstein, and Lone Pine’s Stephen Mandel.

Greenberg previously was a partner at Paulson & Co. and is one of the few women running a hedge fund. Margate, which focuses on tech, media and telecommunications stock investments, has touted Madison Square Garden in earlier client letters seen by Business Insider.

The number of billionaires is growing, fuelling demand for sports teams

Samantha GreenbergLinkedInSamantha Greenberg.

Greenberg’s thesis on MSG cited several factors, including a likely growth in the value of sports teams, which are in fixed supply, fuelled by a growing number of billionaires, the most likely buyers of teams.

The number of billionaires has grown at a 10% CAGR since 2010, she said, citing a Forbes estimate.

Billionaires like buying teams because they get attractive tax benefits — the majority of the purchase price can be written off against an owner’s total income, she said.

Also, as viewership of the NBA grows internationally, foreign investors are also showing interest in buying teams, she said. The NBA got its first Chinese owner last year, for instance, when Lizhang Chiang bought a stake in the Minnesota Timberwolves.

The valuations of US sports teams have grown at an average 20% annual growth rate for the past five years meanwhile, Greenberg said in her presentation.

She also cited a growing demand for live sports content. Last year, 93 of the top 100 most-watched shows on television were live sporting events, while live sporting events, which make up 2% of TV programming, represented half of all TV conversations on Twitter, she said.

The stock could jump based on several catalysts, the most obvious being a buyout of MSG by Dolan family, which owns 22% of MSG and controls 70% of the company’s voting power, she added.

Separating MSG’s entertainment assets from its teams would be the most logical value-unlocking catalyst, meanwhile, she said.

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