This Bull Still Has Room to Run: Barron’s Interview with Boyar Value Group

Mark Boyar and Jonathan Boyar were interviewed in the March 4, 2017 issue of Barron’s.

In Barron’s previous interview with the Boyar Value Group, (“How to Buy Dollar Bills for 50 Cents,” Aug. 17, 2013), Mark Boyar recommended five stocks, including Microsoft (MSFT) and Molson Coors Brewing (TAP). Those five stocks have returned an average of 69.1% since then, versus 55.5% for the S&P 500.

In this interview, Mark and Jonathan Boyar revealed that the Boyar Value Group is now partial to Madison Square Garden (MSG), the owner of the New York Knicks and Rangers, as well as MSG Networks (MSGN), a cable operator that broadcasts their games. Both could be takeover plays. They’re fans of media mogul John Malone and his group of companies, including QVC Group (QVCA), the home-shopping outfit. They also like Tribune Media (TRCO).

To read the article in its entirety, please click here.

To receive Boyar Research’s most recent full-length report on the companies featured in the interview, please click here.

Excerpt from the article:

Barron’s: What’s your approach?

Mark Boyar: We buy great businesses that are temporarily mispriced. We’re agnostic with regard to size or industry, but we do tend to avoid cyclical industries. We’re incredibly patient. The turnover in our mutual fund last year was only 4%. We’re reluctant sellers. We don’t like to see our clients pay taxes.

Barron’s: What do you think of the overall market?

Mark: There are a great many stocks that are overvalued, but there still are many, particularly those that are not part of a major index, that remain neglected and quite cheap. This bull market, dating back to March 2009, could become the longest in history. It is quite possible the S&P 500 could get a higher multiple of earnings than it currently has. I wouldn’t be surprised to see the market trade at 22 or 23 times earnings. It’s now at 18 times.

Barron’s: You like both Madison Square Garden and MSG Networks, which separated in 2015. Let’s start with Madison Square Garden.

Mark: It owns the New York Knicks, the New York Rangers, the Madison Square Garden arena, the air rights above the Garden, and the Forum near Los Angeles. The company has a market cap of about $4.4 billion, with $1.4 billion in cash and no debt. That leaves a $3 billion enterprise value [market value minus net cash]. Forbes recently valued the Knicks at $3.3 billion. So you’re effectively getting everything else for zero. Based on the $2 billion price that Steve Ballmer paid for the Los Angeles Clippers in 2014 and marking everything to what we think it’s worth, we value the stock anywhere from $250 to $300 a share, and it now sells at around $180.

Barron’s: Do you see any catalysts?

Mark: The company steadily has been buying back stock. It could lever up the balance sheet and pay out a special dividend, or the controlling Dolan family could try to take it private. There are a host of things that could happen to unlock value. The two-year anniversary of the spinoff is coming in October, and that could give the company more flexibility to do something.

Barron’s: What else appeals to you about it?

Mark: One thing we look for is an intrinsically undervalued business that has a catalyst. But we also look for a margin of safety. When we’re in a market that sells at 18 times estimated 2017 earnings and a lot of the stocks within the S&P 500 are overvalued, we’re happy to find a company that sells at such a discount to intrinsic value.

Barron’s: Let’s move on to MSG Networks.

To read the article in its entirety, please click here.

To receive Boyar Research’s most recent full-length report on the companies featured in the interview, please click here.

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