Madison Square Garden Entertainment Corporation(MSGE, Financial) was the greatest detractor from relative performance in the quarter. Shares began to sell off as rumors surfaced that MSGE was exploring an acquisition of regional sports and entertainment company, MSG Networks (MSGN). The all-stock transaction was officially announced on March 26th. Company management believes the combined company will lead to a stronger liquidity position to fund current and future growth initiatives, including the MSG Sphere in Las Vegas, as well as support opportunities in sports gaming such as specialized broadcasts, licensing, branding, and sponsorships on a go forward basis. Additionally, the company is expected to realize meaningful tax efficiencies with MSGE's Net Operating Losses and plans to accelerate the depreciation recognition of its Las Vegas Sphere. At current trading levels, MSGE is trading at a 41% discount to our estimate of private market value.
From John Rogers (Trades, Portfolio)' Ariel Fund first-quarter 2021 commentary.
