Madison Square Garden Inc.
Thesis
Madison Square Garden is undervalued at 4.8x projected 2013 EBITDA compared to regional sports networks that typically sell for 15x-25x EBITDA. The ongoing renovation of the Garden is expected to significantly boost earnings, with a target price of $40 per share based on a 10x EBITDA multiple, and a potential $50 per share based on a sum of the parts valuation. The NBA lockout presents a buying opportunity as resolution could catalyze stock price appreciation.
Did it work?
The thesis successfully identified Madison Square Garden as undervalued, projecting significant earnings growth due to renovations and a favorable comparison to regional sports networks. The stock price increased by 1461.0%, far exceeding the target price of $40 per share, confirming the thesis's validity and the anticipated catalysts. The long-term horizon has been fully realized, supporting a high confidence in this outcome.
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