Billionaire fund manager Mario Gabelli is the CEO of Gabelli Funds and shared his top picks for 2020 in last weekend’s Barron’s Roundtable.
Batting For The Atlanta Braves
The Atlanta National Braves is among the few North American professional sports teams with exposure to the public market. In The Braves’ case, Liberty Braves Group owns the franchise along with the surrounding real estate development area and other assets.
Gabelli told Barron’s there are four catalysts to support the stock. Theses include: 1) the team performed well last year with a 97-65 record, 2) changes in ownership rules would increase the value of the Braves’ minor league teams, 3) growth in sports betting implies the baseball league will gain more advertising revenue, and 4) the SunTrust Park is performing well.
Beyond these catalysts, the Liberty Braves Group is controlled by executive superstar John Malone.
All put together, Gabelli told Barron’s he wouldn’t consider selling the stock “for less than $42” per share which implies upside potential of around 40%.
‘The World’s Most Famous Arena’
Gabelli also told Barron’s other top picks for 2020 include “the world’s most famous arena,” a.k.a. Madison Square Garden. The iconic New York City venue is home to the NBA’s New York Knicks and NHL’s New York Rangers. When the home teams are on the road the arena typically holds concerts for some of the world’s most popular stars.
Gabelli said the stock could benefit from some financial engineering. Instead of spinning the sports teams and other assets, the company will be spinning off its entertainment properties through a “SpinCo.”
However, he said he only likes the “RemainCo,” which includes the sports teams. Financial media outlet Forbes places a valuation on the Knicks alone north of $4 billion. Elsewhere in the league, ownership transactions took place at high valuations, most recently Alibaba’s Joe Tsai paying a “fairly significant amount of money” for part of the rival New Jersey Nets.
The entertainment venue is also expanding its brand outside of New York City, including venues in Las Vegas and London, England, Gabelli isn’t particularly excited at this prospect as costs are coming in higher than expected so far.
Gabelli followed up on a Fox Business “Barron’s Roundtable” discussion where he justified owning a stake in the Knicks despite a reputation of being among the league’s worst performers for the past few years. He said he has owned the stock for some time and is merely waiting to see what the balance sheet looks like post-spin off before he “pounces even further.”