Jonathan Boyar on the “Dolan Discounts” at MSGS and MSGE

Jonathan Boyar was a guest on Andrew Walker’s Yet Another Value podcast where he discussed the investment case for both Madison Square Garden Sports and Madison Square Garden Entertainment. Both were recently featured in our recently released Fresh Looks: A Special Opportunity Issue.

To read/view more of Andrew’s fantastic content, please visit his substack page.

 

Click Here to Read the Interview Transcript

Andrew Walker: Hello. Welcome to Yet Another Value podcast. I’m your host, Andrew Walker. If you like this podcast, it would mean a lot if you could listen, rate, subscribe, and review it, wherever you’re listening to it. With me today, I’m happy to have on, Jon Boyar. Jon is the CIO at Boyar Research. John, how’s it going?

Jonathan Boyar: Thanks for having me. Things are going really well.

Andrew: Thanks for coming on. I’m excited to have you on. I think this is your 4th appearance, actually. But I’ll get to that in a second. Let me start the podcast the way I start every podcast. First, a disclaimer to remind everyone who’s listening. Nothing on here is investment advice. Please do your own research. Consult a financial advisor. We’re going to talk about two of my favorite companies to follow. One of my favorite sports out there today. So I’ll be a little more fun than normal but please remember all of that. And then second with the pitch for you, my guest, people can go listen to your prior three appearances for a whole pitch. But you’re on today because for people on YouTube, I’m holding up right now. You came out with a Fresh Looks, which has about 15 or 20 stock companies that just reviewing them.

And the thing that was interesting to me, I put it in my monthly note last year and we were talking about before, the last time you did like an inch or a year Fresh Looks, I believe was April 2020, and then you come out with one towards the end of July 2022, which I think the markets up like 10% since then. Obviously, the markets just raced since April 2020. And I was kind of joking, “Hey, when Jon puts out a Fresh Looks, read it, don’t read whatever you want to do, but just go buy stocks because that’s when things are getting pretty hairy out there.” I read through the Fresh Looks and really enjoyed it. The thing I wanted to talk about the most in it and I think the thing you want to talk about the most in it was the Dolan discount stocks. Two of my favorite stocks are MSGE and MSGS. And I’ve rambled a lot. I’ll just pause there. Why should investors be paying attention to MSGE and MSGS right now?

Jon: Once again, thanks for having me on this. This is a lot of fun. In terms of why should they be paying attention to MSGE and MSGS, stocks are cheap. There are catalysts. They’re really high-quality assets. They’re the definition of assets that really can’t be replicated, which is something we like a lot at the Boyar Value group. Just to a quick step back for those of you who don’t know the Boyar Value group really has two arms. We manage money as an RIA, we also sell research. A Fresh Looks is one of the pieces that we recently did. These are stocks that we liked MSG just by way of background is a company that we have been following for years. Literally, since it was before I was born.

The reason why I say that is MSGS and MSGE were part of a company called Cablevision, which was one of the largest cable companies in the US and was sold to Altice, I think 2016 at a price we never thought we would get. But as I said, it was part of that conglomerate, I guess, for lack of a better word. In 2010 or so, they decided to spin out MSG from Cablevision. What’s really interesting thing to note while I was looking back, we profiled it. And Andrew, I’m happy to send you the report. We profiled MSG in March or so of 2010. The enterprise value of MSG at the time was $1.5 billion. Essentially, it consists of what is now MSGS and what is MSGE and the enterprise value of those two businesses now is roughly $8 billion.

So there’s been a lot of value that’s been created. But I still think there’s a long, long way to go. One of the reasons why these stocks are cheap, and I guess, I probably should take a quick step back and just explain what those assets are. MSGS owns the Knicks and Rangers, essentially. That’s their main asset. MSGE owns and we’ll talk about this because it’s a little more nuanced, owns what is Madison Square Garden. It owns the air rights above Madison Square Garden. It owns Regional Sports Networks. It has long-term leases and things like Radio City Music Hall. It has the Rockettes franchise, and something called the Sphere in Las Vegas. That’s just putting everything kind of on the table. Both of these companies are selling at significant discounts tool. We perceive that they’re actually worth it due to something that people on Wall Street call the Dolan discount.

And that is perceived to be the Dolan family as extremely unfriendly to minority shareholders. There are certain aspects of that that are 100% true. But over the long run investors who have invested alongside the Dolans have been rewarded. They just have to be patient, which is a problem that most people on Wall Street seem to have. I went on Bloomberg this morning, I was just kind of curious. So I looked, and it looks like Cablevision went public in 1986 and was sold as I mentioned earlier to Altice in 2016. If you include dividends, that’s Cablevision stock increased in value by 3585% percent roughly versus the S&P, which increased in value by 1900% roughly. So it’s been significant. I am not saying the S&P is necessarily the best gauge. I guess, it could’ve done a media index or whatnot, but it shows that over the long run, value has been created.

Andrew: But let me just hop in there because I think this comes to, I want to talk about all aspects, MSGE and MSGS. MSG has been a popular topic on this podcast. Chris McIntyre came on with a very concentrated pitch on them. You and I talked about when MSGE was buying MSGN and how that deal made no sense. So we’ve talked about that. But I want to start with that first point you made, right? Like, people give MSGE and MSGS a Dolan discount, and investors who have invested in the Dolan’s over time have done very well. You mentioned Cablevision, that performance is insane. MSG from 2010 to 2021 has done great. I think it’s easy to look at and say, “Hey, if we just invest and close our eyes and forget that James Dolan is terrifically mismanaging the Knicks on the court product, we will make money over time.”

Yes, that has worn out, but there’s a part of me that also wonders like Cablevision was mainly James Dolan’s dad. I also wonder if the assets are just so good. Warren Buffett’s got the thing. You want to have a company that’s so good that even a monkey can run it. Because one day a monkey will be running it, right? There’s this ham sandwich open crew but I won’t go into it. But I do wonder if these assets were just so good that they’ve just overcome how bad the Dolan’s are? And kind of blinded us to that. I’ll give two examples, Cablevision, guess what? Having the cable rights in the greatest cable boom of all time from the 80s to early 2010s and kind of tri-state area, one of the richest areas in the country, yeah, that’s probably going to be a really good business.

For the Knicks, okay, from 2010 to today, the stocks are up about 10x, I think. That’s great, but I’m just looking at the average NBA franchise value in 2010 was 350 million. In 2022 it was about 2 billion, I believe? It hasn’t really outperformed the average franchise. Five times the league’s flagship franchise kind of 10 times. It doesn’t seem it’s really outperforming just how good these assets are. Does that make sense?

Jon: Absolutely. But yeah, it’s really the only way to buy those types of assets and play that trend, at least in the public markets. I guess, if you have money, you can invest in a company called Archos, which is a PE firm that buys these things. I’m not saying that this is John Malone/Warren Buffett that is not.

Andrew: I got some problems with John Malone these days. [inaudible] [crosstalk] talking about that another time.

Jon: I’m not saying he’s Barry Diller. I’m not saying he’s whoever named your really good capital allocator. But I don’t think he’s as bad as people think. One of the things that are really worth noting is, myself included have been saying sell the teams, you’ll create value. I did a hashtag sell the team or whatever that create some traction on Twitter. But the best move he could have made or he did make is not selling the teams. He could have taken that check at getting $3 billion or whatever could the Knicks, whatever he would have gotten in 2013, 2014, or 2015. But he saw the value of sports media rights. Obviously, he could’ve seen sports gambling. That kind of came out of nowhere to some extent but that’s the sports media rights of the 2020 kind of decade. I think that’s going to really increase value.

Yes, it’s the only real way to buy these franchises. If we had a different owner, would there be this discount? I highly doubt it but that’s the opportunity. Sometimes we found that, I’m not saying he is, but some of our best investments have been investing in companies that are horribly managed because that leaves an opportunity. Not to go on a sidetrack, but just, for example. We’ve talked about Warner Brothers Discovery, right now, I don’t want to get started but one of the opportunities there is Warner Brothers has been mismanaged for, I don’t know. It’s part of AT&T. They don’t know how to run a media company and then they were part of Legacy Time Warner. They were being propped up for sale.

So that creates opportunity for Zazzle and Company who I think know how to run a media company. They’ve done it. Again, I don’t want to get sidetracked.

Andrew: I can get very sidetracked on Warner Brothers Discovery.

Jon: Yes but it’s just an example. An ideal situation is to buy, get something really cheap, great asset with a great cap allocator. How many times do you really get that? You have to kind of be willing to give on one of those things.

Andrew: Well, I think if it works for you, we’re going to talk about both MSGS and MSG. But let’s start with MSGS because I think the story is they’re simpler. I have two questions on MSGS. I’ll make it three questions. I think it’s a very simple story we talked about. Let’s just do quickly, again, for the forgotten 40 people, there’s a nice little chart here that I can cheat off of. But let’s just quickly talk to MSGS some of the parts. Basically, MSGS owns two things. They are in the Knicks and the rangers. They have a very little bit of net deck but they own the Knicks in the Rangers. At today’s share price, they’re trading about $170 per share. We can say the enterprise value there, market cap at low for billions. Let’s say 4.3 billion to make a nice even number. When I buy 4.3 billion, I’m paying for the Knicks and Rangers, what am I actually getting there?

Jon: You’re getting the Knicks and the Ranger. Believe it or not, peoplepy attention to Forbs, values, and now there’s a rival company, forgot the name of it. Basically, Forbes journalists went in and they valued the Knicks at six billion dollars. How they come up with that valuation of somewhat of black box but they come up with it. As I said, this is actually used in negotiations. In many many instances, the Forbes value ends up being extremely conservative. So for 4.7 billion or whatever it is now, you get the next which are worth well in excess of six billion dollars at least in my opinion or in our opinion. And then you get the Rangers which Forbes values at two billion dollars. I believe it’s two billion dollars. You’re basically getting paid to own the team.

So there’s some cost basis and tax issues there which we adjusted our valuation. But it’s essentially the way we look at it. It’s pretty much a double from here maybe we’re being a little aggressive, I don’t know. Time will tell. But there are things that are going to help unlock that value, I think sooner than we think. So it’s a really kind of interesting situation.

Andrew: So I think I don’t disagree with you. So I used to be very long MSGS and I kind of moved on but I always still follow it just because I don’t disagree with that Math. But when I was along it, one of the things I did was exactly what you did. I took, “Here’s the Forbes value for every sports team that has traded in the past.” I think I was 12 years at the time. “And here’s what they actually went for.” The average premium was around 28%, you mentioned 30%. The really interesting thing was the larger the city that it traded the bigger of a premium of went for. Because if you had the option if you had unlimited money and somebody said, “Hey, you can own the Knicks, or you can own the Oklahoma City Thunder.” You’re going to pay up more for the next because then you’re the face of the league.

Right now, the Thunder have a lot of draft picks though so it might be a little more fun running them. I think you see what I’m saying there. But I guess the question I would have on just a sales price is, look, if you’re talking five billion dollars plus 20% premium, a six billion dollar check, that’s different than seven years ago when it was a two billion dollar check. There just aren’t a lot of people who could write a six billion dollar flat-out check. So I guess my one question would be, on that premium, are there people around who can actually write checks that big and pay that premium? Or are they going to start running into a situation where, “Hey, the value is so big, like they just can’t get the premium that they would kind of want and deserve because there’s just not enough money out there?”

Jon: Yeah, no, that’s a great point and a fair question. One of the things that could happen is that as I mentioned earlier, private equity firms that are involved. I think I have to wait a 20% of a team in the NBA after [inaudible] what it is in the end.

Andrew: I believe that’s correct. I believe that’s correct.

Jon: So they could take stake in the team, which would help put a marker on it, which I think would help unlock value. That’s one thing that can happen. Worth noting, you look at the shareholder base of Madison Square Garden sports right now. Silver Lake, the private equity firm owns 9% of the company. I can’t pronounce his name but he’s an Egyptian billionaire. He’s an Egyptian billionaire. He owns six percent of the company. You have the Bill and Melinda Gates Foundation that up the stakes from one-and-a-half percent to 3%. And then, you have KKR owns I think one and a half percent of the company.

There are people there who as a group combined maybe it’s not one person who buys it. It’s group the way I think the 76ers went about where you get a group of people who buy this and I don’t think there’s any shame in going halfsies or thirds with [inaudible].

Andrew: What was that Jay-Z own point, one percent of the nets for a while and everyone would call him a Nets minority investor even though his ownership rounded down to what you and I have known of the nest?

Jon: Yeah, I mean, these things could happen. These are clearly big checks. There’s also people who now just have massive amounts of wealth. If Steve Ballmer wanted to buy a team today, I don’t know his financial situation, he probably could do it. He’s never said he’s shoulder share of Microsoft stock.

Andrew: Bomber owns the Clipper.

Jon: No, absolutely. I’m saying if he was going to do it again. There are people out there who could do it or you do it as a group. And I’m not saying Bill Gates doesn’t seem like that’s his personality is going to buy the team. I think it’s interesting to see that all of these long-term-oriented investors who are not necessarily trying to beat an index but are trying to make money. Silver Lake to some extent, but Egyptian guy, the KKR and these others, and Bill Gates for the foundation’s money are taking these long term use. To me, the hardest thing about investing is people because their investors for them to take short-term views and that’s why a lot of people get frustrated and put their put their hands up and will avoid the stock. But if you’re able to have that luxury of time, you could make a lot of money.

Andrew: Again, I don’t want to spend too long on MSGS because I want to talk MSG but there’s one thing that will change issues but I do just want to ask the other question on. MSGS is the big ten over, I believe it was over this weekend just got a massive massive contract from a bunch of different people. If you listen to the most recent MSGS call, I’d encourage anyone to go listen to it. It’s really interesting. They talk about great business momentum. Renewals are up 9%, double-digit increases in cap spending during the season. I think the Knicks will be better this year. The Rangers coming off a deep playoff run, I think it’s going to be really good. Sports betting is just going to be this is the first year where it’s going to be there in full. But the most interesting thing to me is if you think back to when all of the NBA teams really inflected, it was in the mid 2010’s when first Steve Ballmer bought the clippers for two billion dollars, which was way more than anyone would thought they would go for.

And then within a year, the sportswriters renewals came in with the TNT ESPN contract, and they like, tripled and no one realized how high they were going to go. And if I remember correctly, MSGS is stock. It was MSG at the time was up like 30% in three months or something on the heels of this news. I do just keep wondering. Big Ten just got that massive increase, NBA sports rights are coming up in the 25 26 season. They’re probably going to get renewed in the next 18 months. Everyone I listen to, I’m a big NBA fan, thinks that it’s going to be a big number. I wonder if the markets are a little bit sleeping on in the next two years you get a massive renewal and then Forbes comes out and says, “Hey, our value of the Knicks isn’t six billion anymore. It’s nine billion because sports rights have gone through the roof.” So I’ll just pause there and let you comment on kind of that overall environment.

Jon: Yeah, no. They get a share, I believe it’s pro-rata of the leak deals. It’s a prime beneficiary and these are big, big, big numbers. Yeah. I think that sports and news are obviously what people watch live and that’s extremely valuable for folks when they’re paying off for it will content spending moderate. I don’t know. I think it probably will. I just don’t know if it will for sports. I think if the days of, hey, a comedian 40 million dollars or whatever for a special are long gone. Netflix is not going to be doing that anymore. But these things are really valuable and that’s one of the things that’s going to drive the price of these things I think higher and higher. So that’s also another Cal. So yeah, I think it’s 2025 2026 but that will happen before then the number will be announced well in advance, etcetera or they’ll be whispers of what’s going to happen. Look what happened with the Cricket stuff in India. I mean these are huge numbers.

Andrew: Yeah, it’s the last thing where you get it and people have to appointment view it. It’s definitely the last thing where people were bothered to watch advertisements. Because you watch a game, there’s natural breaks, you kind of have to sit through it. Whereas if I’m watching Hulu, the other day, I was at my in-law’s house and Hulu with ads, and I have Hulu without ads and we’re trying to watch something at night and an ad popped up. My wife and I were like, “What is happening here?” It just totally discombobulated. Only place you’ll watch ads. Only place monoculture. Only place you bring it and 10 million hardcore NBA fans are going to subscribe to your service day one. It’s the best cost leader out there.

All right, let me do a transition question for MSGS to MSG. You mentioned Steve Ballmer and you hear lots of complaints with Steve Ballmer. His check book is so big. The Clippers can spend way too much money. The other thing is the Warriors. The Warriors and the Clippers do not care about the luxury tax apparently. For the Warriors, it’s because they built the Chase Arena and apparently that thing just mince money. So my transition question from MSGS to MSG is like MSG owns the Garden, the Garden most of the value in it, it comes from New York City. But a lot of value got the Knicks and Rangers everything. As you think longer term, I know we’ll talk air rights and I know were talking about all this. But one day, the Garden, will it be like the Chase Center where they redo it and it’s just this absolute money-making, money printing machine. Not that it’s even doing poorly now but it’s there that kind of optionality down the road.

Jon: There’s definitely an option down the road. One, they redid it. In some ways, it’s analogous to the sphere, which we’ll talk about in a little bit, where they want massively over budget and people got all upset. I think that was
around the financial crisis. I could be wrong.

Andrew: They redid it 2010 into 2011, a billion dollar spend and people were furious at the time. And I think nowadays they say, hey it was probably like a 15% IRR and everybody’s pretty happy with a 15% IRR.

Jon: So they have experience in doing this. There’s a lot of things that could happen. It seems crazy now that people are not as with New York City in the state of it, that they may be building things around Penn Station. It’s a little too complicated or too much to probably go into the whole details of what’s going on there. But there is the possibility of the Garden potentially being moved at some point in time as part of a larger strategic move. So a lot of things could happen. So, yes, you could have a redo of the Garden at some point in time.

The answer is I don’t know, but it’s certainly a possibility and that will help. Although it’s worth noting the MSG called talking about how food and beverage is really doing extremely well. All these things are doing really well. It’s now a 12-year-old arena, so it’s not the shiny new thing anymore and there could be value.

Andrew: Yeah. MSGS another thing they call out is they talk premium and I do think if you redid MSG today especially in New York City, I think there would be like just kind of more devoted to the sweets and the really high-end stuff where the money is really made. I’m no expert in stadiums. I think MSG is designed for a little bit of an older model and yes, they’ve redone it. But I think you can do a lot more with sweets especially in a city just as rich with as much finance and media, as much entertainment spend as New York City had, that would be my thing.

But let’s turn over to MSG. MSG, you and I are talking straight just under $60 per share. We can talk some of the parts. We can talk everything. The last time I think I had you on was we’re decrying how crazy the MSG NMS GE merger was. I still think it was crazy but we actually were going to record this podcast last week and then we said, “Oh, earnings are coming up. Let’s wait>” It’s a good thing we waited because MSG said they might do a spin-off coming off. There’s all this stuff going on. I’ll pause there. What’s going on with MSG? How are you thinking about that these days?

Jon: Yeah, it was very interesting. It was Thursday night going to the city with my family. I get this alert saying MSGE is now looking to do a spin-out. Essentially what they’re doing. I think it makes a lot of sense is you’re having… Basically, what I talked about with Sphere which I encourage anyone just to Google the Sphere Las Vegas. See what it is. It’s basically a state-of-the-art entertainment system. the greatest sound system and light system in the world that’s coming out in Vegas that’ll come out in the second half of 2023 it looks like at this point. It looks like it’s going to cost two billion dollars to build. I wrote out an article many years ago saying, I wish they never did this, but it is what it is. This is what you get with the Dolan sometimes.

So what they did was MSGE is separating the two companies. You’re going to have the Sphere, it’s something called Town Nightclubs, which is going to be one company, which will actually, I believe will be the MSGE company. I’m not 100% sure.

Andrew: Ton and the Sphere will stay in the current ticker is my understanding. We can talk about this is an interesting structure. They’ll spin out 2/3 of the other assets which is mainly the Garden, the Rockettes,
and the long-term lease on Radio City. I think those are the main assets that may be missing one. They’ll spin out 2/3 of that to shareholders and that will be in a new company that they’re calling I think that’s the Live Entertainment company.

Jon: Yeah, they haven’t had a name on it like that. I don’t know why they didn’t seem to call the other one MSG Sphere and this MSG entertainment. Whatever it is. But you also, in what I consider MSG entertainment would also be the RS and the Regional Sports network is another kind of major assets. I don’t think I haven’t seen where they’re putting the air rights.

Andrew: Say that again.

Jon: I haven’t seen or they haven’t announced I believe where they’re putting the air rights that MSGE…

Andrew: I could not imagine that you would spin out the Garden and not include the air rights with the actual physical property. I just couldn’t imagine you would do that but I guess there’s a chance they keep it inside.

Jon: Yeah. They just didn’t specifically call that out. I would say the logical.
It also wasn’t logical than doing the MSGN deal. There are certain things that I just rather assume nothing and just see what happens. So essentially everything in MSGE except for the Sphere and Town Nightclubs is one entity, and the other asset is the other structure.

Andrew: Yes, so let me just talk about this structure first. So they said, “Hey, we’re going to spend two-thirds of Garden, Rockettes off to shareholders and we’ll keep one-third at the Spear and Tau company.” That’s a really strange way to do it. Companies do two-thirds one-third spins. It’s more 80/20 sometimes, but it’s just strange to spend two-thirds up. Am I remembering correctly that’s originally how they were going to structure the MSG SMSGs spin and then they called it off and just did a full spin?

Jon: I don’t remember what the proportion was but I do look at it and the research service did a big report and spinouts maybe five or six years ago. Companies that retain portions on the spinouts actually do significantly better.

Andrew: Interesting. And I’m just remembering the big asset that they’re going to spin out with the Garden that we were forgetting was Networks. They’re putting Network sits in with the Garden as well but yeah.

Jon: Yeah. So I think maybe they’re keeping it. One they can always spin it out further later on optionality. If they need more cash later on, this is an asset that they could sell. I would hope that wouldn’t be the case. But they’re claiming that the MSG Sphere which is exactly going to cost about two billion dollars to build. They’re exploring for future ones more for cap light ways of doing it. I don’t know. Franchise model is the way I would put it. This is not a Burger King but I think it just might give them some optionality.

Andrew: Let’s stick with thi Sphere then because I know I’ve got a lot of smart friends who are long MSGE and the maths just hit you over the head. This is a three billion dollar EV company. A lot of the debt is at the MSGN level, not the corporate level. So they’ve got about 1.7 billion of debt. About 1 billion of that is networks that which I’m not even sure if networks covers the debt these days but we can talk about that later. But the math hit you over the head when you say, “Hey, this is a three billion dollar enterprise company.” They’re going to spend 2 billion on the garden, 1.5 of that’s already on Sphere. The Gardens almost certainly worth 2 billion. Networks, if we’re giving them full credit for the debt is worth probably 500 to a billion. Rockettes are worth 500. The math starts hitting you over the head.

So I’ve got a lot of friends here longer than just the math hit you over the head thesis. We didn’t even talk air rights there. But then I’ve got a lot of friends who are shorted on, “Hey, these guys are putting two billion dollars into the Sphere and they think they’re going to be more Spheres beyond this, what world are they living in?” This is awful capital allocation. Originally, they thought it was going to cost one point three billion dollars and it would have been a bad investment there. So I guess I just want to ask like, my two friends, some people look at asset value. Some people look, this is just lighting money on fire left and right, like how do you look at the MSGE?

Jon: When we did our valuation of the Sphere, we value it at a 50% of the construction costs. Then we put a big haircut on the cash. I forgot what percent of it to account for. As I said earlier, actually I wrote an article for Forbes three years ago saying I didn’t like this thing? I wish they didn’t do it. They have the best assets in the world minus the Sphere for entertainment? Why are they doing this? But let’s take the contrarian article part of it and maybe James is correct building the state-of-the-art menu, 20,000 seats in Las Vegas that has the world’s greatest sound, greatest lights, huge sponsorship opportunities, huge utilization. Maybe he’s right. I mean, I don’t know if it’s officially announced but it floated that U2 is going to be the opening act and that do a residency there.

Vegas is if you pick a venue for this would be the perfect one. There’s no
ROI given is I don’t think they know what it is. I think this is not good capital allocation, I fully agree. But based on kind of what you said before, they just have so many great assets that it’s hard to ignore unless you also as a physician you put it kind of accordingly. Doesn’t have to be a 10% position in a portfolio. There’s a lot of up potential upside where it could become a 10% position if all things go well. So it’s a different way kind of looking at it. So I think there are certainly issues there, but as I said earlier, the issues create the opportunity.

Andrew: Yeah. Let’s talk about another piece that has issues inside of it and that’s MSG and networks, right? So the last time you were on, they were merging MSGE into MSGN and I think both of us thought that was a terrible deal. The reason was MSGN has been a standalone RSN forever. Our argument was that makes absolutely no sense. They need to sell to a bigger company that’s kind of got an umbrella where they can go negotiate and say, “Hey, you drop us, you’re not just losing MSGN, you’re losing ESPN, you’re losing Disney,” something along those lines. There would have been massive synergies and said they sold it. They did a related party transaction, MSG MGN merge. I think they said on the queue for a call. They said, “Hey, MSGN has done its job. It got us a lot of cash flow that we directed into the Sphere.” Oh my God, I can’t believe they said the quiet part out loud.

But today, you look at MSG networks, Comcast drop them in October of 2021. Once one person drops you, you’re always worried that someone else is going to drop you. They say MSGN is going to release a direct-to-consumer standalone app, I believe in the second half of the NBA regular-season, NHL regular season. I just look at that and I say, “The best time to release an app is before the season starts.” I think there are some restrictions on why they can’t do that but I look at that, I look at Comcast dropping them, and I say “MSGN seems mismanaged these days and it seems like a really terminal asset.”

Jon: Interestingly, I think MSGN was the first Regional Sports networks or back to where you said, Charles whose 95 years old, the patriarch of the family was responsible for that. Yeah, it’s a challenge business but I would say that sports gambling is this will help them tremendously both in terms of sponsorship opportunities. It’s now I believe for MSGS their largest kind of advertising. It sports game. It’s sports gambling. Even if the Knicks are terrible, which is a good assumption. People watch games if they bet on them, higher advertising fees. I think they increased by $10 million this past year and it was a shortened season. It was the last season which was shortened.

So there’s a lot to like. I realize also your the bear case will be that DraftKings, etcetera, won’t spend as much money going forward. But, I think the sports gambling is going to surprise people on the upside for them. We talked about it before, I fully agree that MSGN they should never have done it. It was inappropriate, it’s bad use of funds. It’s just different shareholder base, but it is what it is. I mean, the only good thing to say is I own shares in both. So I kind of got both but I didn’t like it. It’s kind of funny also, I don’t know if you saw anyone who was involved, any of the plaintiffs lawyers involved in that or not allowed at Madison Square Garden.

Andrew: Say again?

Jon: Any of the plaintiffs lawyers who were suing them, are actually banned from Madison Square Garden.

Andrew: Oh, that’s hilarious. Devon Charles Oakley can’t.

Jon: Yeah.

Andrew: Banning the plaintiffs lawyers does make sense. MSGN, I am worried that it is a terminal assetb ut as you said, like, sports betting is so huge for these guys and we still haven’t even started really touching into the sports betting where like the real in-game stuff where you’re watching the game and you can just press, “Hey, I think Julius Randle is going to score a bucket on the next game.” Once you start getting that in there, the feast will be so high and like look at us, MSGN and guess what? It’s still called MSG Network, right? Every other RSN that I’m aware of, I’m sure there’s someone missing but the major RSN I’m aware of, have all rebranded to Bally’s Regional Sports networks or whatever.

It seems like there’s a hundred million dollars of very easy value going to Caesar’s DraftKings and FanDuel and saying, “Hey, right now, highest winner. We’re going to rebrand MSG Network to FanDuel Network for the next seven years. Highest bidder wins. Let’s go.” It seems like there’s 100 million of value easy there. There’s lots of value. And the one good thing that I’ve always liked about MSGN, every other RSN has about five year contract rights. If I remember correctly, MSGN has the Knicks and Rangers locked up till about 2035. That’s still 13 years, that’s a lot longer. It’s in a major market, it’s so great.

One thing I want to talk that, I think you’ve done more work than most we have talked on, the air rights for the Garden. I don’t think we’ve really talked about air rights on this show. So the Garden is on fire right now. They talked about Harry Styles going to do a 15 day tour, I think it’s the best gross that they’ve ever done in 2022. They were having the best gross, just sell out every night. So the Garden is on fire, but nobody really talks about air rights. So I just want to ask you what are we talking about wwhen we say, “Hey, the Garden’s air rights.” What’s the value? What’s the plan to develop those?

Jon: For those who haven’t really seen it or what not be, the garden is a relatively low building. They have the rights to build up. I forgot how many feet but they have 2.5 million I think of buildable feet. So they have the right to do that. Realistically, you’re not going to do that, you’re not going to have condos in touch of Madison Square Garden, I think it’ll be a little weird.

Andrew: It would be kind of cool though if you had the 30th floor apartment and during games, you were feeling the crowd scream as things are- that’d be kind of cool.

Jon: Yeah, you can. The in-laws are convoluted and I’m just doing this in a very basic sense, but you can essentially transfer or sell your rights to other people. There’s a whole movement to develop that area. The governor wants to do it. Vornado wants to do what they want to build the office towers. To me, it seemed a strange time to build office towers. It’s been going once [inaudible] city. But maybe that’s up being more forward thinking that I’m being. These are rights are very valueble. You literally can sell air. And it’s not like this is pie in the sky. There’s been transactions through the years on these things especially churches and other places of worship have sold these. So that’s something that you look at. I’ve looked at some of the sell-side reports on MSPE and this is one of my criticism of the sell-side. There’s no word of air rights mentioned there. They’re valuable. They could be worth hundreds and hundreds of millions of dollars.

When they monetize them? I don’t know. Will they? I’m not sure but it’s certainly possible. One of the things I fully agree with you, I mean, I think the MGM MSG Network kind of has a somewhat nice ring to it, but they’ll go to the highest bidder. Not saying they would do this but just think what would naming rights of the Garden go for. I mean, just think about how crazy what do they pay for crypto.com? I hope they got paid in advance by the way.

Andrew: Yeah. I think got 300. When crypto went through, I did the math and I was like, “Oh, the Garden would go for something for quite a bit. But I do think, you never know.

Jon: I’m not saying it’s going to happen, it’s not.

Andrew: I do think the Garden they like it kind of as a brand rightly or wrongly but it is Madison Square Garden presented by something if I remember correctly, right? It’s like MSG presented by Chase or something. I can’t remember.

Jon: They have big sponsorship with Chase but as I said, I think that’s
not going to happen but it just shows the value of it.

Andrew: I’m from New Orleans, I remember for years. It was the superdome, right? I could have never imagined this was the Superdome maybe from New Orleans over blue, but at the time was the biggest thing. It hosted some of the biggest things. And then guess what? Mercedes came along with a really big check. And they said, “Oh, now it’s the Mercedes-Benz Superdome or something.” This could be the Bindle Madison Square Garden or something. So it can definitely happen.

Jon: It’s just there’s just so many things that could go right. People are just focusing on the negatives. So that’s where…

Andrew: When I look at your valuation, you’ve got the air rights for MSG 2.5 million billable square rights at $300 per square foot, that comes out to 800 million dollars which that is a lot of money against, as I said, this is an enterprise value company of about 3 billion. So just want to ask, where did that $300 per square foot number come from?

Jon: We just look at comparable transactions that happened. Obviously, it’s a weird time to be in New York right now. The way that might be aggressive, probably is, but we also valued, as I said, the cash balance is 75% of the current cash balance. We valued that Sphere basically half of it what it cost to build. That part of it, who knows? But it’s worth a lot of money and it will one day I think be monetized and will be pretty interesting.

Andrew: Just real quickly. So, we’ve talked networks, we’ve talked Garden, we’ve talked to air rights. The other big piece, I mean I don’t think Tau is worth that much. I know they like to say, Vegas reopening it’s going to be an international business. I don’t think tells worth that much these days but the Rockettes are real brand. Every now and then, we’ll like glimpse a little bit of their financials, but what do you think the raw the Rockettes are worth inside of MSGE?

Jon: We don’t have an exact value of it but your writing is substantial. Part of their results why they weren’t nearly as good as they could have been for the years, seems like a long time ago, but a large percentage of the Rockettes shows this year were cancelled because of Omicron. [inaudible]

Andrew: It’s so easy to forget, it’s like forever ago. But I remember when the press release came out, it was like December 7th or something and said, “Hey, we have to cancel the rest of the Rockettes show for Omicron.” The Rockettes run from November to December. They don’t run a huge amount of time. They make a lot of money in that time, but they don’t run very long. So if you cancel those shows, that’s peak earning season gone.

Jon: Yeah, there’s other things I guess you put another cities. I’m not sure what what you would do. Obviously, you want to keep it special in New York. But the Rockettes are valuable. There’s just so many assets under there. They have a stake in DraftKings. They have a stake in a kind of a micro cap company called [inaudible].

Andrew: Yes, I know [inaudible] media. Yeah.

Jon: Which we own full disclosure and full disclosure in MSGE and MSGS. I’d imagine after this conversation, you would think I do own it, but there’s a set full disclosure. So this is a lot of assets there. James could be more sinister reasons for doing it but is I think help highlighting that value of some of these assets. It’ll be interesting to see what happened and it was fascinating that post-market the MSPE was up about 16% that Thursday night. It’s now giving back more those gains then some. Bottom line’s to cheap stock.

Andrew: No, disagreement there. Let me write this up with one last question, just switching back to MSGS site. I know you cause a little bit of a stir. You went on CNBC and said, I think for years, people have kind of whispered, “Hey, Dolan’s putting the feelers out that he’s going to sell the team.” We went through MSGS and how much more value there would be if they sold the team. But you went on CNBC, and got a little bit of traction where you said, I think he might sell a team. A bunch of Knicks fan said, “Hashtag, sell the team.” I believe Dolan had leaked to the New York Post, “We’re not selling the team right now.” But if I asked you, what are the odds you and I are sitting here talking in three years, five years, seven years, and the Knicks and Rangers are still inside of MSGS as a publicly traded company with James Dolan control. What would you kind of say the odds of that are?

Jon: I don’t know what the family dynamics and how everything works in terms of estate tax but Charles is 95 years old. His family owns a substantial amount. There could be a state reasons for them to sell. It is certainly a chance but I think if you give me a seven-year number, I would say that it is well above 50% that they would sell it. But it’s hard to put probabilities on it. But I think there’s a significant chance that they sell it and I think there’s even more of a significant chance that they sell part of the team to a private equity firm to put a value on it. At the end of the day, he controls everything. But what if someone comes in and then buys a real substantial stake of 15, 20% of the team or whatnot and tries to agitate for things. I mean, it makes it very uncomfortable for him.

Andrew: I don’t disagree with anything but the most interesting thing you said in there, which I hadn’t really thought about is Charles is 95. After he passed away, the most common things and family ownership when you own a sports team is after kind of the patriarchy pass away, a lot of agitation for change and especially, I mean, I think the Dolans have plenty of money after the Cablevision sale. But that MSGS take is going to be worth a lot, and it doesn’t pay out any cash flow, right? Well, the Dolans pay themselves pretty nice board fees, but that pales in comparison to what if they sold and they didn’t have to have all their friends being like, “You guys suck as owners” behind their back all the time. There could be some really interesting family dynamics there and I’d almost be curious to go higher or like inheritance lawyer or something to go dig through and say, “Hey, how vulnerable is James going to be once dad passed away?” Because you see that a lot. I mean, the bus family had a lot of dynamics there, they managed to Lebron’s Lakers but there were some weird dynamics there.

Broncos sold or maybe will sell after their patriarch had died. Even the Allen Family, rumors a lot of those assets for sale. And trust me, the Allen family was not hurting for money.

Jon: Yeah. There’s a bunch of siblings there. I think James has veto rights on it. I could be wrong,but I believe that’s how it’s set up. But their family dynamics can create a lot of strange things. So there’s a lot of optionality there. As I said before, this is not an instant gratification stock, but for people who are patient and you look at some of the investors in both MSG MSDS, besides the ones I name, you have Mario Gabelli. You have the folks at aerial, some of the best investors that I know. Very long-term patient investors. Those are the top shareholders and one or both companies. So I think it’s worth if you have more than a year time frame. It’s worth taking a look at.

Andrew: Are you basketball fan?

Jon: I am, I mean, I watch but not a huge fan.

Andrew: I was just going to ask. Do you want the Knicks to trade for Donovan Mitchell? And you can say I’m not super up to date on that.

Jon: I’m not up to it, I couldn’t give you an intelligent answer. It’d be nice if Lebron James was on the team. Besides that, I…

Andrew: You just reside with the Lakers so I don’t like that’s happened. But I know my listeners only listen to me for my takes on basketball. I will be apoplectic if the next trade all of the graphics and everything for Donovan Mitchell, but I think is very overrated. I’m willing to wait one more year and play out free agency next year but that is just. It wouldn’t be bad to make a playoff run but I would not be a big fan of that, but cool.

Hey Jon, this was great. Again, Jon came on because he just put out a fresh look on through the link, to it in the show notes. If anybody wants to check that out, everybody should follow Jon because he follows especially if you like, as I’ve said many times, if you like quality companies at reasonable prices like that is Jon’s wheelhouse. That is what Boyar does all the time. MSG, MSGS, they’re more than quality, I would say. And they’re probably more than cheap, but there are management questions. But Jon, thanks so much for coming on and looking forward to chatting with you soon.

Jon: Great. I thank you for having me. It was a lot of fun

 

This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates.  This material is as of the date indicated, is not complete, and is subject to change without notice. Additional information is available upon request. No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this interview should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this article.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at https://adviserinfo.sec.gov Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions. Clients and employees of Boyar Asset Management own share of both Madison Square Garden Sports and Madison Square Garden Entertainment.

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6 Stocks With Significant Upside

Is the recent stock market advance a bear market rally or the beginning of a new bull market? Regardless Boyar Research has identified 6 stocks that we believe to have a significant upside from current levels that also have catalysts for capital appreciation. We invite you to watch Jonathan Boyar’s presentation below that will outline the investment thesis for these 6 companies. 

One of the companies mentioned in the presentation was recently featured in our latest research issue Fresh Looks: A Special Opportunity Issue. In this special issue, you’ll receive reports on 13 companies,  including in-depth reports on nine companies that we have researched in the past and that we believe to be well-positioned moving forward. In addition, you’ll receive updated one-page summaries on four additional companies that fall within these criteria. Any purchase before August 19th will include two of the most recent issues published by Boyar Research (7 full-length reports)  as a bonus. 

 

 

 

 

 

 

 

The information contained herein reflects certain opinions and projections  of Boyar Intrinsic Value Research (“BIVR”)  as of the date of publication, which are subject to change without notice at any time subsequent to the date of issue. BIVR does not represent that any opinion or projection will be realized. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any data presented. Prospective investors should not treat information in these materials as advice or recommendations in relation to legal, taxation, or investment matters. Past performance is no guarantee of future results.

Statements herein that reflect projections or expectations of future financial or economic performance or potential performance of accounts managed by affiliates of BIVR are forward-looking statements. Such “forward-looking” statements are based on various assumptions, which assumptions may not prove to be correct. Any projections and forward-looking statements included herein should be considered speculative. Accordingly, there can be no assurance that such assumptions and statements will accurately predict future events or affiliates of BIVR actual performance for any accounts that it manages, and no representation or warranty can be given that the estimates, opinions or assumptions made herein will prove to be accurate.

The securities identified and described do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Affiliates of BIVR may invest in securities of micro/small-and medium-sized companies and these companies tend to have a shorter history of operations, be more volatile and less liquid and may have underperformed securities of large companies during some periods. Value securities may underperform other asset types during a given period. Value-based investments are subject to the risk that the broad market may not recognize their intrinsic value. Investing involves risk, including the possible loss of principal and fluctuation of value.

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Investors need to beware of false bargains, says Jonathan Boyar in a new CNBC interview

Jonathan Boyar joins CNBC’s ‘Closing Bell: Overtime’ to discuss Warner Brothers Discovery, Madison Square Garden Sports and why he believes it is a great time to be a value investor.

Disney was featured in our Fresh Looks  Opportunity  issue, we wanted to offer you access to that report which highlights the additional upside that we see. Please click here to download your copy. 

 

 

 

 

 

 

 

This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. Past performance does not guarantee future results. This material is as of the date indicated, is not complete, and is subject to change without notice.  Additional information is available upon request.  No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this video should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable.   Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors.  This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research.  Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this email.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.  Clients of Boyar Asset Management own shares of The Walt Disney Company, Warner Bros. Discovery and Madison Square Garden.

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Bank of America, Disney, and Uber All Look Like Bargains

The Boyar Value Group was recently featured in Barron’s in an article penned by Nick Jasinski discussing stocks that appeared in our recently released Fresh Looks: A Special Opportunity Issue.   An excerpt from the article is below.

“We’ve become increasingly bullish over the medium to long term,” says Jon Boyar of the Boyar Value Group, which includes an investment firm, Boyar Asset Management, and a research arm, Boyar Intrinsic Value Research. “Has the market bottomed? I have absolutely no clue. But I think many stocks have reached a point where the risk/reward is solidly in investors’ favor.”

Boyar’s approach is a more opportunistic style of value investing than traditional value investing, which tends to focus on buying the cheapest stocks. That means defining value relative to his team’s estimates of a company’s future potential, not necessarily relative to the broader market or the company’s industry. Last week, Boyar Research put out a report called “Fresh Looks,” highlighting about a dozen stocks whose share prices have declined more than their business prospects. The median stock in the report was recently down 25% year to date and 32% from its 52-week high….

To read the entire article, please click  here (a subscription may be required).

 

 

 

 

 

 

 

 

This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. . This material is as of the date indicated, is not complete, and is subject to change without notice. Additional information is available upon request. No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this interview should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this article.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at https://adviserinfo.sec.gov Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.

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Uncovering Investment Opportunities in a Bear Market

Bear markets are scary, but they create tremendous opportunities for long-term investors willing to do the research necessary to uncover bargains. However, it’s critically important not to be fooled into thinking something is a bargain simply because it has declined by 30%, 40%, 50% or more.

In order to help our subscribers navigate the bear market, the Boyar Research team is about to release a special report titled Fresh Looks: A Special Opportunity Issue. Because this is such a timely and important issue, we are also selling it on an a la carte basis.

The report will contain profiles of companies we believe to be great investment opportunities because of the recent selloff that have attractive long-term fundamentals as well as catalysts for capital appreciation. All reports are based on intensive research from our team of highly seasoned analysts with an average of 20+ years of experience.

Opportunities in a Bear Market and Past Performance

Make no mistake: bear markets are difficult. That’s why, in times like these, having access to the work of a team that has published research since 1975 (through a combined 24 stock market corrections and bear markets) is a significant competitive advantage.

It’s important to remember this: those who stick with their positions during difficult times (and add to existing positions or initiate new ones) are typically handsomely rewarded – provided those positions are attractively valued and have catalysts for capital appreciation. These are the times that independent thinking, experience and perspective really matter.

A Look Back at Our 2020 Opportunities Issue

Published in April 2020 during the coronavirus induced bear market, this issue provided timely investment ideas and uncovered tremendous opportunities for subscribers looking to invest for the long-term during another period of market dislocation.

The returns have been strong. The average stock profiled in the April 2020 coronavirus update – one (1) year after publication – advanced 76.18% on average vs. 49.83% for the S&P 500, and 45.01% for the S&P 1500 value.

The average stock profiled in the April coronavirus issue two (2) years after publication advanced, on average, 59.98% vs. 57.82% for the S&P 500 and 54.96% for the S&P 1500 value.

Complimentary Offer: Interested in learning more about how we approach investment opportunities in a bear market? Download the full 2020 Opportunities issue here.

What You Will Receive in the 2022 Fresh Looks Issue

In this special issue, you’ll receive reports on 12 companies. Including in-depth reports on nine companies that we have researched in the past and that we believe to be well-positioned moving forward. In addition, you’ll receive updated one-page summaries on four additional companies that fall within these criteria.

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Order Today

Have questions or want to learn more? Reach out to Amalia Danci at 212.995.8300.

 

 

 

 

 

 

 

Important Disclaimer

*This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar’s Intrinsic Value Research (“Boyar”). Past performance does not guarantee future results. This material is as of the date indicated, is not complete, and is subject to change.  Additional information is available upon request.  No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. 

*Nothing in this email should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Intrinsic Value Research and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable.   Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar’s Intrinsic Value Research LLC or any of its affiliates is not responsible for third-party errors.  This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research.  Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. The starting date of the calculation was April 15th (the date the report was priced), and the ending date was April 15,2021 for the one-year calculation and April 15, 2022 for the two year calculation. No transaction or management fees were taken into account in this calculation. All stocks were equally weighted when calculating the results. Results include all special dividends and spinouts. Spinoffs such as MTCH, VMEO and QRTEP were calculated as if an investor held the spinoff entity from the date of the spinout to the one-year anniversary/two year anniversary from the pricing date.  The returns do not include dividends for the benchmark or the stocks profiled.

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The Boyar Value Group’s 3rd Quarter Client Letter

The Boyar Value Group just released our latest quarterly letter to clients.

Please find an excerpt of the letter below:

We haven’t decreased our equity exposure, and we don’t plan to; instead, we like to take advantage of these moments of market dislocation to increase our equity holdings. We’re pained at the thought of losing money for our clients, but we see this year’s losses thus far as “paper losses,” not as a permanent loss of capital. After all, the price of a stock on any given day is simply what people are willing to pay for a business at that moment. But we believe that over the long term, either the stock market will come to reflect the business’s true value or an acquirer will purchase it for its true worth, as we’ve seen so many times before. We have no reason to believe that this time will be any different.

Please click here to read the letter

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Value Investing Q&A Speaker Series Video Excerpts

Over the next couple of weeks we will be posting excerpts from Jonathan Boyar’s Value Investing Q&A at Brown University.

 

Video #1: UBER Thesis 

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Video #2: Fallen Angels

 

Video #3: Why we buy stocks to “own” for the long term?

 

Video #4: How does Boyar’s approach to portfolio diversification translate to individual client needs?

 

Video #5: Different Types of Value Investing, Boyar’s Type of Value Investing

 

 

 

 

 

 

 

 

 

 

 

 

This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. The results of the Forgotten Forty are not audited. This material is as of the date indicated, is not complete, and is subject to change without notice. Additional information is available upon request. No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this interview should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this article.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at https://adviserinfo.sec.gov Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.

Boyar Asset Management or its affiliates, its employees and/or shareholders  may own shares in any of the companies mentioned in the interview. The presentation represents the  views of Boyar as of the date of this interview and is subject to change at any time without notice.

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How To Navigate The Current Stock Market Volatility Revisited

Amid the daily parade of frightening headlines, it’s anyone’s guess what will make stocks recover from here. But through all the uncertainty, I am keeping in mind Warren Buffett’s observation that “the future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.” As I wrote on May 6, I agree with this sentiment wholeheartedly:

The near term will likely be bumpy, but I’m optimistic about the future. In fact, now is when investors should be thinking about increasing their equity exposure: historically, the best time to invest is when you feel the worst. Even highly experienced and successful investors find taking this plunge difficult, particularly when prices keep falling, but buying great businesses at marked-down prices and holding them for the long-term is historically how the best returns are made.

 

Click Here To Read The Full Article

 

 

 

 

 

Important Disclaimers

This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. This material is as of the date indicated, is not complete, and is subject to change without notice. Additional information is available upon request. No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at https://adviserinfo.sec.gov Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.

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Boyar’s Updated Thoughts on the Recent Stock Market Volatility

Below is a letter we sent to Boyar Asset Management clients on 06/17/2022.

 

On May 6, we wrote you to share our thoughts on the recent stock market volatility, noting that the selloff was likely driven by many different investor concerns: inflation, interest rates, the war in Ukraine, supply chain disruptions, and an economic slowdown in China. Unfortunately, with these factors still in play, the stock market (using the S&P 500 as a reference) has since declined by a further ~11%. We’ve officially entered a bear market, defined as a drop of 20% or more from the previous peak.

Amid the daily parade of frightening headlines, it’s anyone’s guess what will make stocks recover from here. But through all the uncertainty, we’re keeping in mind Warren Buffett’s observation that “[t]he future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.” As we wrote on May 6, we agree with this sentiment wholeheartedly:

The near term will likely be bumpy, but we’re optimistic about the future. In fact, now is when investors should be thinking about increasing their equity exposure: historically, the best     time to invest is when you feel the worst. Even highly experienced and successful investors find taking this plunge difficult, particularly when prices keep falling, but buying great businesses at marked-down prices and holding them for the long term is historically how the best returns are made.

        Although bear markets can be painful, they shouldn’t prompt investors to sell. Decade after decade, investors have been best served by holding their positions in high-quality companies, and they’ve been even better served if they have the funds (and stomach) to buy more—after all, the timing of market rebounds is nothing if not unpredictable. As the following graphic shows, since 1957, the median market return (again, measured against the S&P 500) has been positive 1 month, 3 months, 6 months, and 1 year after officially entering bear market territory. Certainly in some years stocks have been down during those time frames, but that’s been the exception, not the rule.

S&P 500 after closing in bear market

We still believe that investors should stay the course. We haven’t decreased our equity exposure, and we don’t plan to; instead, we like to take advantage of these moments of market dislocations to increase our equity holdings. We’re pained at the thought of losing money for our clients, but we see this year’s losses thus far as “paper losses,” not as a permanent loss of capital. After all, the price of a stock on any given day is simply what people are willing to pay for a business at that moment. But we believe that over the long term, either the stock market will come to reflect the business’s true value or an acquirer will purchase it for its true worth. We have no reason to believe that this time will be any different.

Unfortunately, today’s stock prices are being driven by panic over macroeconomic headlines, not by underlying business fundamentals. Wall Street has historically overreacted to economic data, whether positive or negative, prompting economist Paul Samuelson to famously observe that “the stock market has predicted nine out of the last five economic recessions.” The stock market hates uncertainty more than anything else, and right now we’re knee-deep in it. How long before we’ll find solid ground is anyone’s guess.

Reasons for Optimism

But the situation isn’t all doom and gloom. The U.S. banking system hasn’t been this strong in decades, unemployment is at historic lows, and consumer balance sheets have been bolstered by recent government stimulus programs (though the savings rate has recently declined, and credit card balances have increased significantly—developments we’ll be keeping a close eye on). A recession is certainly possible, but these factors should help mitigate its effects.

Equally important, investor sentiment is at multiyear lows, with consumer confidence even lower than after the September 11 attacks, during the 2008–2009 financial crisis, and during the coronavirus lockdowns. Both these markers have historically been great contraindicators for future stock market returns. Consumer confidence might well go lower from here, but its worth noting that —according to JP Morgan, the average 12-month return of the S&P 500 after the eight consumer sentiment troughs since 1971 was 24.9%:

Finally, and most important, the stocks we own are quite inexpensive—and the best predictor of future stock market returns is valuation. In times like these, putting things into their proper perspective is essential. Today’s headlines are alarming, but they pale in comparison with those we saw during 2008–2009, when people thought the global financial system was on the brink of actual collapse. Likewise, in 2020, when the coronavirus drove the economy off a cliff in mere months, investors feared for their physical health, not just their financial health. Even so, staying the course was the right move in both cases, and we see no reason this time should be any different.

As always, we’re more than happy to answer any questions you might have. Please feel free to call our office at (212) 995-8300 or email us at info@boyarvaluegroup.com. Looking forward to better days ahead.

Best regards,

Mark A. Boyar

Jonathan I. Boyar

 

 

 

 

 

 

 

Important Disclaimers

This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. This material is as of the date indicated, is not complete, and is subject to change without notice. Additional information is available upon request. No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at https://adviserinfo.sec.gov Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.

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Jonathan Boyar on The Virtual Value Investing Q&A Speaker Series at Brown University

In a recent edition of The Virtual Value Investing Q&A Speaker Series at Brown University (where previous guests have included Howard Marks, Wally Weitz, and Arnold Van Den Berg) Jonathan Boyar discuses:

  • Our stock selection method(s)
  • Two of Boyar Asset Management’s largest positions: Home Depot and Microsoft and the importance of holding stocks for long periods of time
  • His views on the current media landscape
  • His thoughts on Uber, IAC, and ANGI
  • How Boyar is investing in the cannabis industry
  • His thoughts on portfolio diversification
  • And much more…

To listen to the interview in its entirety, please click here. 

 

Click Here to Read the Interview Transcript

[00:00:00]
[silence]

Interviewer: 0:03 We’re absolutely glad to have Jonathan Boyar here with us today. Jonathan Boyar is president of BIVR, an independent research boutique established in 1975 that counts some of the world’s largest sovereign funds, hedge funds, mutual funds and family wealth offices as subscribers.

0:21 He is also principal of the Boyar investment management which has been managing money utilizing a value-added strategy since 1983.

0:26 He has been interviewed in Barron’s, Welling on Wall Street and Guru Focus. He spoke at the 2017 London Value Investor Conference, the 2017 Guru Focus Value Conference and the 2017 International Value Investing Conference. He is also a contributor to the latest edition of Harriman’s Book of Investing Rules of the do’s and don’ts of the world’s best investors. He is a senior contributor to Forbes as well as the host of the World According to Boyar podcast.

0:50 Thank you for joining us today Mr. Boyar

Jonathan Boyar: 0:52: Thank you for having me today it’s an honor to speak for your organization, and I’m happy to just chat and I look forward to getting some great questions later. I first thought I’d start by just telling you who we are, what we do and how we come up with stocks for four clients. We’ve been doing this for quite some time and the slide up here says unlocking value since 1983 that’s somewhat true.

1:27 We actually started as a research boutique; my father started the business in 1975
to sell independent research to hedge funds, mutual funds, family offices, that type of thing utilizing what we like to call a business person’s approach to stock market investing and then in 1983 we established four-year asset management where we manage money for family offices, high net worth individuals and institutions.

1:58 I’m not sure why the slide’s not working but here, let’s do it this way.

2:09 Here’s a disclaimer. You have that.

2:15 So first, I thought I talked a little bit about what we do. We’re very different than your traditional value investors and, I’ll talk about value investing in general, a couple slides from now, but what we do is we take every company whether it’s Walt Disney, Microsoft, any big, huge company or a tiny 2:39 one like Town Square Media and we look at it through the lens of an acquirer and we say or what we try to do is we can buy it at a significant discount to what we think it’s wort.

2:56 That’s something we will consider, that’s the first, you know first criteria it has to meet and then the second criteria is it has to have a 3:08 catalyst. I have to have a reason for the stock to go up over a reasonable period of time and we’re much more patient than most people. You know, Barron’s once called my father the world’s most patient investor.
3:20 We look at catalyst that could take two or three years to unfold. We don’t mind waiting that long because patience is generally rewarded.

3:34 I love this quote and I think it’s as true as when Sir John Templeton was investing as it is today: “I think that you can’t be afraid to be different.” If you’re buying the same stocks as everyone else is as Sir John says you’ll get the same results so what you want to do 3:57 is find stock that you believe in that are believed to be intrinsically undervalued, stocks that you want to own for long periods of time to allow the magic of tax-free compounding to work.

4:17 So personally I dislike the term value investing. I think it’s a term that’s really kind of used by consultants and other institutions to try and style box people, put everyone in a neat little corner.

4:36 I like to say I don’t think any growth investor wants to overpay for a stock

4:41 So, value investor is the same thing. There are lots of different schools of value investing and some people like to buy traditional value stocks where mediocre businesses that are just very very cheap and that’s really the deep value camp and that’s something we rarely do anymore. It worked really well when my father started the business in the 70s and in the 80s when having a calculator was a kind of a big advantage and a big technological thing. It doesn’t really work as well anymore.

5:28 If you’re doing deep value investing, you’re going to end up probably with a lot of broken retailers.

5:34 There’s special situation investing where there’s an event that’s going to occur that you think you can analyze better than others. There are asset plays like Madison Square Garden that own extremely, that don’t look statistically cheap but if you sum up the value of all the assets they have, the stock price significantly discounts that value.

5:58 So there’s lots of different ways to approach value investing and what we like to do is we like to invest in in high quality businesses selling at a significant discount to
what an acquirer pays and has a catalyst for capital appreciation.

6:17 Having that high to medium good business is critically important.

6:23 We don’t want to rent stocks we want to own them, we want to own them for
very, very long periods of time.

6:35 If I look at where we have made the most money, probably our two largest positions are Home Depot and Microsoft where I think we bought them starting in2006 and 2007 and sold very little of it and they’ve come to become outsized positions. I think it cost us then30 dollars a share and now they’re significantly better than that. And when we bought them, they were good businesses. We could never imagine that they would have compounded the way they have and 7:14 Microsoft would have the renaissance that it did, but we knew we were buying a high-quality business and we kind of just let stuck along for the ride.

7:27 One of the things I like to tell people is doing nothing is an action. You don’t need to be turning your portfolio over every day. If you do that, you’re gonna miss the jump from in Home Depot from $30 to $300 and change and you’re gonna be paying taxes
along the way.

7:50 Just briefly gonna talk about our investment process. We look at how much cash flow a company can generate, we like to look at recent comparable transactions that’s extremely important to us as they’re the best judge of a business value.

8:09 To us, the most important thing is protecting the downside, the upside takes care of itself. We want to buy businesses where we have the chance to make a fair amount of money but most importantly not lose a lot of money so that’s something that’s critically important to us.

8:34 It’s also to have that. Buffett and Hunger call a circle of confidence. There are things that we like to invest in and they’re things that we don’t.

8:48 We like the businesses, a lot of consumer-oriented businesses, media businesses things that you can touch, feel, analyze, and really understand. We don’t like commodity-oriented businesses and over a long period of time that has helped us. And the thesis behind not wanting to own a commodity-oriented business-like oil and gas company or something to that effect is your whole thesis or a large part of it is predicated on the price of oil which is out of your control, and I have no idea how to value what oil is and where it’s going. So, if I’m looking at buying an entire business which is what I do when I buy individual stocks and looking at it if I’m buying the whole company, I wouldn’t want to own a business that is solely dependent or largely dependent on a commodity price that is outside of our control.

9:54 Over the long run that’s helped us. 2019 it was great when oil stocks and energy stocks did terrible. 20 or 21 we suffered and so far, it’s March 3rd we’re suffering this year, but I think over the long run it’s the right thing to do

10:17 We have lots of different approaches. We look for stocks as I said we like looking for hidden values, hidden assets that are not properly reflected on the balance sheet. We like looking at the 10:34 franchise approach rate, consumer franchises especially when they’re masked by a corporate name. That’s actually a really great way to find value.

10:47 If I told if I asked most people and I actually did this when I was on a trip when we were actually allowed to travel, do you know what Acushnet was? No one really knew what it was, and these were sophisticated investors and I said, well they own Titleist
golf balls and golf gloves and other really great brands and that’s actually it stops people from looking at it and they see Acushnet, what’s this and they go on to the next thing. So, it’s actually a great way to find value.

11:28 We love when an industry falls out of favor and that can happen really quickly
You’re seeing so far, the early signs of it with the technology share so far this year.
How low that goes is anyone’s guess but when an industry comes out of favor, they throw the baby out with the bath water and we try to find the best of breeds, the ones that are going to survive and thrive over the long run and that’s been a successful approach for us over time.

12:04 You look at things like capital allocation, decisions financial strength and again prices for what other companies have been acquired in the recent past is critically important.

12:21 Hidden asset approach is also something that’s great and that we love and one of the reasons that we love it is no computer screen in the world or artificial intelligence
is going to tell you that something’s not valuable. Something that’s valuable is not reflected on the balance sheet and I’ll just give you a very quick example. Madison Square Garden has been a holding of ours for a long period of time and we’ve had a decent amount of success with it.

12:57 When we first started analyzing it Wall Street assigned zero value to the air development rights where you can actually sell your pair to neighbors but what we saw was the real estate that was located near Penn Station. That’s equal to the enterprise value of the entire company, so essentially at that price you were buying Madison Square Garde’s business for zero costs. So, a lot of times because of accounting rules and things like that great assets are obscured.

13:34 The classic example I gave you, my father told me one of the first stocks he ever
looked at was Tiffany and company and at the time you could have bought the whole
company for 24 million dollars in 1975. The building it owned on 57th street and in fifth avenue which wasn’t reflected on the balance sheet was worth more than the entire
market cap of the company. So, you’re getting the Tiffany name, all the jewelry etc. for free. These things still work, and it still happens you just have to be patient and pick your spots.

14:11 I talk about you know consumer franchises before, we also like fallen angels, we love looking at the one starlings of Wall Street or that are now unwanted, unloved.
What’s critically important is not falling into a value trap. You have to look at the reason why the stock has gone down and look if there’s a long-term business there that’s not in secular decline and that’s obviously a business judgment that you have to make and that’s something that you get with time.

14:56 We also look at spin-offs that’s a fruitful area to define things. That’s been pretty well documented.
15:08 We also sometime look at companies emerging from bankruptcy so it’s just basically we’ll look anywhere there’s value that we can understand, and you know I’ll just say one more time: being inexpensive stock is only halfway there. You need to have that catalyst otherwise you have a significant danger of falling into a value trap which is one of the biggest problems that investors fall into.

15:40 I promised I would be brief, and I think this was about 18 minutes or so. if you have any questions, feel free to contact me. I’d also encourage you; I have a podcast called The World According to Boyar. That’s available anywhere. We
have really interesting guests, that’s a good way to get some business lessons and you can sign up for everything if you go to boyarvaluegroup.com. Thank you for your time.

Interviewer: 16:14 Thank you so much, that was a really excellent presentation and I’ll send you the questions.
16:19 Our first question is how do you see the media streaming space going forward?

Jonathan Boyar: 16:25 The media industry obviously is undergoing a tremendous amount of change and you’re trying to find the winners is very difficult.There’s a lot of smart people chasing this. You know, there’s an old adage: content is king and to me the ones with the best content are the ones that are gonna win and looking at a company like Disney they’re gonna be winners. They’ve already I think have 130 million subscribers to Disney plus. They’ve priced it competitively they still haven’t rolled it out to the rest of the world. I see them being big winners.

17:07 We really like the AT&T deal with Discovery. That’s going to happen early in this sometime in the second quarter. It looks like that’s where it will uh occur and you’re marrying lots of different type of content. It’s a lot of overlap, not a lot of overlap so there’s a lot of synergies there so I think these it’s going to be a game of scale and there are these things called free radicals. Companies like that that John Malone calls free radicals like AMCX and others that’ll probably be gobbled up so it’s gonna be a very interesting space to monitor over the next couple of years. I think there’s a lot of value there you have to be patient. It’ll be very interesting to see what happens when Discovery and AT&T consummate the merger. There’s going to be AT&T shareholders are going to be given Discovery stock and most are a lot of their shareholder base is retail. We probably don’t want to own a levered media company so is there going to be a lot of force selling. I don’t know it’s probably been the most telegraphed thing I’ve seen in a long time. So it’s quite an interesting space to be in.

Interviewer:18:28 Absolutely and let me ask you another question about the sectors. One of the players that you have right now is Apple TV and I think you know the
marketing cap and the size of the company compared to some of these other players is much much much larger um and they have quite a lot of uh quite a large cash balance but they’ve been going more through an organic raptor they’ve been developing their own content. Do you think we will see them go more and then we’re gonna graft at some point and buy one of these other major players?

Jonathan Boyar: 18:54 I wouldn’t rule anything out. I don’t know, I mean it’s interesting. They said if you know Steve Jobs had lived they would have probably bought Disney. Now Disney’s too big and it made a lot of sense for a lot of reasons. I think it would make sense for Apple. You know it’s very difficult to replicate, to create original content. These production studios cetera cost a lot of money it would make sense for them to buy something. I mean they have a lot of other issues that they have to contend with they have government regulations you have to contend with, so I don’t know.
It’s always puzzled me why they haven’t done that and what their real true intentions are, but you know time will tell.

Interviewer: 19:48: Can you speak about your thesis on UBER and I mean do you have any sort of forecast for when you think they will reach profitability?

Jonathan Boyar:19:53 Over the next couple of years they should. I think UBER is extremely undervalued. I think it’s a terrific re reopening play and what we really like about UBER is the competitive advantage. I mean they literally spent billions and billions of dollars to have this network. It reminds me in some ways a PayPal. Five, six, seven years ago or what not where it didn’t get the respect it deserved from the from this from Wall Street and this network is extremely valuable. Some people like to complain about UBER and drivers aren’t happy, that passengers aren’t happy. Bottom line is people are using them and demand is picking up and I think with the reopening
I think the rides business is going to really surprise. On the on the upside, the CEO, they have a great CEO, former IAC Expedia guy, just bought 10 million dollars’ worth of stock. It’s a name that we like it’s not in your traditional value camp but it has things that we think are of value which is that network.

Interviewer: 21:14 And so you think them reaching profitability will be more related to revenue growth and economies of scale or do you think it’s going to be more related to them having such a large market share just being able to jack up the pricing of rides?

Jonathan Boyar: 21:25 I think the more of the first and then in the second I mean they were subsidizing a lot more rides in the in the beginning than they are or now. I just think it’s the economies at scale. They’re going to be, listen, Disney’s great at this too with their new um park system where they’re able to maximize revenue. It’s great to be able to do that but you also do want to keep your customers happy to some degree.

Interviewer: That makes sense and can you please speak about your thesis for ANGI home services as well?

Jonathan Boyar: 22:02 In terms of ANGI it’s more looking at IAC in general which owns 85 of ANGI home services so essentially if you’re buying IAC you’re also making a bet on ANGI that’s probably a better risk reward way of doing it.

22:17 ANGI’s a great business and they’re pivoting in a really unique way. They want to you know the company is controlled by Barry Diller who’s been this type of person you want to invest alongside with he’s had returns that were you know compounding at 15 a year since 1995 or so.

22:42 He’s been very shareholder friendly and what he’s really good at doing is taking
offline businesses that traditionally were done in person. Ticketmaster for example, Expedia, online dating, all of these things that I for you you’re a little younger you’ve grown up with this online your whole life, but it hasn’t obviously always been that way and they’re really good at that making that transition and they’re looking at making that transition to for home services which is a huge total addressable market and they want to be kind of the one-stop shop where they have something called ANGI services where let’s say you needed your gutters clean you go on your phone, you say what the job is and then basically they say okay they’ll cost sixty dollars whatever it is someone will be there um in two days. And they take care of everything and that’s what they’re trying to do it’s a very very difficult thing it’s it’s hard to do but if anyone can do it’s Barry Diller and his team there so they’re making that transition which is just quite difficult to do but it’s faith in the management team, it seems like they’re making the right progress um you know. Probably shouldn’t be a public company probably should be part of IAC as it was growing but I think IAC with owning matched uh I’m sorry owningcare.com having a 27 stake in Turo which is about to go public having a whole host of other valuable businesses: Dotdash Meredith. They just bought Meredith late last year it’s it’s a really great hodgepodge of businesses that makes a lot of sense.

Interviewer: 24:50 I spoke about Tesla in the past. How do you see Tesla today both from let’s say evaluation perspective but also from a business perspective? Let’s say, do you think in 10 years Tesla world you know have maybe a similar market share in the spaces they have today or do you think they’re going to really be competed away by some of these legacy players or some other Startups?

Jonathan Boyar: 25:09 Listen, I I’ve been the wrong person to listen to when it comes to Tesla. I don’t understand as a value person how it’s afforded such a high multiple.
I know people say it’s more than a car company, I get that thesis I just don’t necessarily believe it. I think that they’re in for a rude awakening when GM you know they’re coming out with a whole host of great other cars there’s going to be other competition with Ford. I mean it’s a very very difficult space and traditionally hasn’t been the best business to be in so not really sure why because it’s electric. I realized there it’s a little bit different but it’s to me at these levels it makes no sense.

26:02 Wouldn’t bet against it I think Elon Musk, I admire what he’s done and what he’s accomplished some of the ways he’s done I questioned but, he is certainly a controversial person, but he’s revolutionized an industry. But will he be the ultimate winner?

26:25 And even if he is you know should it be uh top 10 S&P 500 companies. I think it’s worth more than Berkshire Hathaway or roughly. I don’t have a marked caps in front of me but if someone said John for your birthday, I’m either going to give you Tesla or I’m going to give you Berkshire Hathaway. You get Geico you get a huge steak and Apple and Bank of America, you get all these wonderful businesses, I’ll choose Berkshire.

Interviewer: 26:58 It makes sense. Also, you have some at least one investment that’s related to the cannabis industry maybe. Speak a little bit about that and how you view the cannabis industry today.

Jonathan Boyar: 27:13 You know we’re valued investors and as I mentioned before margin of safety downside protection is extremely important to us. We kind of got into the cannabis business by happenstance. We own a company called Scott’s Miracle Gro. James Hagedorn was a guest on my podcast and certainly a very interesting fellow.

27:36 He’s done a great job and they’re in the home and garden space you know anyone who gardens and even if you don’t garden you know what Scott’s is. They’re by far, they’re Coca-Cola like market share in what they do.

27:53They’re sold at Home Depot, Lowe’s, their pricing power, they’ve raised prices three times in the past year. About 10 years ago or so they 28:05 decided to get into the cannabis space but to do it in a different legal way. So, they’re kind of it’s a pick and shovel like during a gold rush event where or situation where they are providing lighting and filtration and all the other anything that a grower would need. And they are by far number one in in their field on this. It’s a billion-dollar business growing rapidly. The stock was $254 in April of 2021 it’s currently $140. And if you chart uh Scott’s Miracle Gro next to a cannabis ETF it looks very similar it’s not solely gone down because the
cannabis business is down in the dumps uh temporarily but it it it’s really been a huge factor and at these levels the way I look at it is I’m buying Scott’s traditional business which is at a full multiple of what it would go in a transaction and essentially getting their fast-growing hydroponics business for free. That also has valuable stakes or will have
29:30 valuable stakes in other consumer branded cannabis companies so it’s a really interesting play. They’re great capital allocators., they give it a special dividend when their stocks expensive they, buy back stock and their stock is cheap. They pay decent they have a decent yield and I think at some point in time they’re probably going to split the company in two.

Interviewer: 30:02 That makes sense. Also, can you speak please about how important do you think either an MBA or a CFA is in the investment management industry especially in regard to value investing?

Jonathan Boyar: 30:16 I’m sorry I didn’t hear the question.

Interviewer: 30:23 Sorry, can you please speak about how important you think either a MBA or a CFA is in uh the investment management industry especially in regards to value investing?

Jonathan Boyar: 30:29 I would say um that I came from a different path. I was a litigator um and then went to this which is I wouldn’t recommend anyone to do. If you’re thinking of going to law school call me, I’ll talk you out of it. I actually love law school. Being a litigator, I didn’t. I would say it’s different. You’re getting a tangible you’re getting a qualification with the CFA, you’re getting you know that you have a very good quantitative background and certainly is impressive on any resume. I think that’s something that especially while you’re in college if you can try and do it and get that you know MBA

31:21 it’s it depends. I mean it’s been weird; I don’t know how it works over the last couple of years with covid and a lot of the MBA is the people you meet if you go to Harvard Business School or some of these other prestigious institutions. That’s part of what you get with an MBA.

31:38 I think you have to take costs into a factor and look what your return on investment is. Certainly can’t hurt but you’re paying a lot. All these studies, people going out of school hundreds of thousands of dollars in debt so it’s something nice if you can afford it but it’s really not necessary. CFA is you have to pay for the test but it’s essentially free

Interviewer: 32:10 Absolutely. You spoke a little bit about your background there so why do you prefer investment management to when you’re a litigator?

Jonathan Boyar: 32:18 It was night and day. I mean, I don’t like looking at my watch and trying to figure out how I’m gonna bill something for a project. I love to read, I love to become curious, I like learning about industries, I like speaking with people. Litigation to me it’s an adversarial field it’s a process, it’s just what didn’t suit my temperament. I really enjoy investment management; I like looking at companies that other people
aren’t looking at. I like finding these hidden gems and working with, we have a fantastic team of analysts at Boyar and hearing their insights. So, it’s you have to do what’s you know a preference for you, know yourself. To me it was hands down a fantastic choice.

Interviewer: 33:16 Speaking of spoilers, what sort of uh backgrounds or previous experiences are you looking for? Let’s say, college students who dream of one day working at Boyar as an analyst.

Jonathan Boyar: 33:27 We typically don’t hire people right out of school just because we’re a small shop and I think people can get you know it’s it takes a lot to train people and we’re very specific at what we do. But I think it’s just a love of value investing, a love of writing, a love of coming up with ideas, being analytical. It’s a whole host of things but having that enthusiasm for value investing is critically important and value investing is something either you get, or you don’t.

34:05 We’ve hired analysts in the past who you know we’re really growth analysts. You can tell that they just didn’t speak our language that they didn’t understand why you should buy a particular stock because they have so much real estate that you’re essentially getting the business for free. They’re looking at the growth rate of the business. You have to have to be something that you’re comfortable with.

Interviewer: 34:35 Absolutely. Can you speak a little bit please about diversification and how you look at that in the portfolio turnover position sizing those types of things?

Jonathan Boyar: 34:46 We treat every account differently, individually based on our clients’ needs so we’ll have anywhere between 20 and 50 names in a given portfolio depending on how concentrated someone wants to be. We’re also believers in not investing everything all at once. It hurt us over the last 10 years when you have a market that’s gone you know straight up but I think over the, I’m always looking at your downside and I like to ease into positions and buy things slowly over time. I just think it’s the right thing to do for a client.

35:33 I don’t look at what sector weightings. Our sector weightings are nowhere near what they are of the S&P 500 or the S&P 1500 value or any of the others. We don’t buy any energy stocks so right there goes one waiting that’s out of the window.

35:57 We don’t like heavy technologies and that’s 26 percent of the index so it goes back to my first slide. You have to or one of my first slides on John Templeton, you have to do things a little bit differently.

Interviewer: 36:14 The next question, why did you switch from deep value from offered deep value investing approach to more of a moat investing approach?

Jonathan Boyar:36:20 I think it’s just about going with the times. I mean deep value I don’t think it works as well it’s also tax inefficient because you’re not buying a company that you want to own forever so you’re holding it for one, two, three years. If the pieces worked well you have to pay the government 25 percent of your earnings so it’s just I don’t think a great tax efficient way to invest.

Interviewer 36:57 Some students have noticed that you tend to own a fair amount of
relatively highly levered companies almost like equity stub opportunities. Is this on purpose and what’s sort of the thinking behind this?

Jonathan Boyar: 37:09 We’ll own levered companies when we think it’s when they have the cash flow to just to support it. We’re in a lot of John Malone names and a lot of them are cable companies and things that have high degrees of cash flow can support that leverage. Obviously in a downturn that could really hurt you so you have to really know what you’re buying.

37:35 I think when you’re buying a leveraged position you should also do your position sizing accordingly.

Interviewer: 37:46 Absolutely. Can you speak about how do you analyze management?

Jonathan Boyar: 37:53 How we analyze management? Yes, we’re a little bit different, we generally we’ll speak to management, but we generally try and avoid them. They tell you everything that they want you to hear, they’re very good salesmen. Sometimes it’s good to speak about their general thoughts on that on the business and where they’re going and their vision, but I’ve never had a company CEO tell me business was bad and
don’t buy the stock.

Interviewer: 38:29 That makes sense. Also, um do you find sort of screeners a part of
your research process either quantitative screeners or keyword screeners?

Jonathan Boyar: 38:40 We do some screening but it’s generally one of the advantages of having a research service. We have some of the most sophisticated people as clients and they also tell us ideas to look into so we’re just always on the hunt and screening works but everyone has the same screens. It’s really digging deeper and you know spending your time reading and coming up with ideas. It’s creating you know it’s a decent starting point but you know you’d also miss like a Madison Square Garden if you were doing the stream. You don’t get those hidden assets and things like that.

Interviewer: 39:19 Can you speak a little bit about your thesis for Disney?

Jonathan Boyar: 39:26 Disney is one of the greatest companies in the world. New customers born every day. Just mentioned earlier they have the best contents out there and I think one of the things that people are not or Wall Street’s not fully appreciating is how well those theme parks are going to be going forward especially with the reopening. I think Disney plus is going to be a tremendous success, it’s going to be bumpy along the way um but I think there’s a lot of upside to Disney.

Interviewer: 40:04 Absolutely. Can you speak about some of the long-term economic impacts that you see as a result of covid?

Jonathan Boyar: 40:10 Can you repeat the question?

Interviewer: 40:10 Sorry, some of the long-term economic impacts that you see as a result of covid.

Jonathan Boyar: 40:16 I think it’s too early to tell. I think there’s a psychological impact on how people have been shot in, shot out for the last couple years. I don’t know what the long-term effects they’re gonna be, but they certainly will be. What is the future of work, I don’t know in terms of remote versus in person? I’m not sure what the long-term impacts are but the world is changing very rapidly. I mean we’re right now, it’s war in Europe there’s lots of horrible things going on but time will tell.

Interviewer: 41:11 Absolutely. How did you initially become interested in investing in specifically in value investing?

Jonathan Boyar: 41:11 I think this is something I’ve been you know; my father started the business so I’ve always watched what he did and admired what he did I’m a curious person and I read a lot and something I just grew up and I never thought I would actually do it as a career but it just to me makes a lot of sense. I enjoy it it’s fulfilling, and you know you get paid to read so it’s a pretty good way to make a living.

Interviewer: Absolutely. Can you talk a little bit about your process for selling an investment? What do you know and how to determine when you sell security and what are some of the reasons that you sell the stock for?

Jonathan Boyar: 41:45 Selling is by far a much harder decision than buying. It’s extremely difficult. We sell for a few reasons. One, thesis changes, we’re wrong on a stock and we just want to get out and cut our losses. We’ll do that, you have to be humble enough to be able to do that or if you need cash and you think there’s a better opportunity to deploy that cash. But we’re reluctant sellers, we like the way you know for taxable accounts the way we look at it is if we’re selling a name, we have to find a stock that has a, that’s 25 you know, that’s significantly more upside. We get to pay 25 percent tax to the government roughly depending on your tax bracket. If it’s a long-term capital gain, we take that consideration, so we’ll only really sell something that we still like if it’s blatantly overvalued.

Interviewer: 43:05 That makes sense. Concluding question, what are some of the
most influential events of your investing career?

Jonathan Boyar: 43:10 I’ve been doing it for a lot longer than I’d like to admit but watching 2008 uh 2009 financial crisis stocks you know going down10 20 percent in a day, S&P going down four, five, six percent in a day. I mean that was just unbelievable to watch. I was much younger then, but it showed you how inexpensive stocks can be and how important it is one, to only invest what you can afford to invest that you don’t need for living or immediate needs, but also how cheap stocks can get. So, it’s good to have some cash on the sidelines to take advantage of some bargains

Interviewer: 44:08 Absolutely. Thank you so much, this is a really terrific session, and we really appreciate you taking the time of your busy schedule to speak with us today.

Jonathan Boyar: 44:19 Thank you very much. Thanks for having me. Have a great day

Interviewer: 44:19 Great, thank you!

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