Let’s kickoff the week with a few links:
- Yet Another Value Blog takes a look at the Liberty Braves Group (BATRA/BATRK) and sees some nice upside potential. Apparently, he also notes, so does Gabelli. It’s a good piece and among other things, includes a long section (which I tend to agree with) on why sports teams are undervalued. In the end, he notes ‘the Braves today are at an inflection point: the team will get better, the new stadium will boost revenue, and eventually new TV deals will drive revenue much higher’. One point worth highlighting is that he does not think a sale of the team is likely in the near future because Liberty needs the Braves as an active operating business. He also thinks they will wait to see if the team turns things around (which I hope they don’t do). It’s not easy for a layman to own a piece of a professional sports franchise so the Braves offer something special. Of course, there is another spinoff, the Madison Square Garden Company (MSG), but overall, your options are pretty limited. As a Mets fan (did I just publicly admit that?), it’s hard to justify owning a piece of the Braves, but sometimes you need to separate personal feelings from investing. Also, and I say this with a tinge of melancholy, given their recent performances, that rivalry feels long, long dead. Especially so since Larry’s retirement.
- Back in 2015, Dan Loeb’s Third Point came out swinging at Baxter International (BAX), but the fund manager’s recent Q2 letter (thanks Market Folly) is singing quite a different tune. Mr. Loeb showered the company and its CEO, Jose ‘Joe’ Almeida, with praise and extolled their numerous operational accomplishments over the past couple of years. Margins have expanded, focus has improved (helped by Baxalta’s spinoff) and the balance sheet is in tip top shape. Of course, the fund has had a board presence during this period, so…he is basically just bragging. Anyways, despite the gains, Third Point isn’t exiting its position in the company and feels there is plenty more to come. It could be through multiple expansion as Mr. Loeb notes that despite all of the improvements, it is still trading at the same multiple. Even ignoring the multiple though, the fund is ‘confident that Mr. Almeida can combine operational efficiency with an unlevered balance sheet to drive continued earnings growth’. It’s worked so far…
Disclosure: Author is long shares of Liberty Braves Group
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