Knicks Win, Rangers Lose: Either Way, MSG Remains a Buy
Back in mid-April, I spelled out my case for investing in MSG.
Since then, the stock popped 10.1%, moving up more than $3 to this past Friday's close of $37.94. During that session MSG touched an intraday, 52-week high of $38.38.
The company blew the door off of the quarter. Because MSG owns the Knicks, the media associated Jeremy Lin's fleeting stardom with the company's solid quarter. I have great respect for The Wall Street Journal (I subscribe and read it religiously), but it's nothing short of absurd that the newspaper would allow this headline to hit: Lin Boosts Madison Square Garden. And it was not the only one offering a thin assessment of MSG's earnings release.
As a long-term investor, I do not own MSG shares on the basis of Lin or even the mere presence of the Knicks and Rangers.
I am long because of synergy. MSG is a vertically integrated regional powerhouse: It owns the sports franchises. It owns the venues they play in. It owns the distribution channels for broadcasts of the teams it owns as well as others.
A bull case built on uncertain and short-term factors, such as Lin, is good for little more than a swing trade. It's irresponsible of the financial media to connect "Linsanity" with MSG's quarter. That approach makes for a decent story with mainstream mass appeal, but provides little, if anything, of value to investors.
Sifting through MSG's conference call, however, makes you a smarter and better-informed investor.