Madison Square Garden Inc.
Thesis
Madison Square Garden is undervalued at 4.8x projected 2013 EBITDA compared to regional sports networks that typically sell for 15x-25x EBITDA. The ongoing renovation of the Garden is expected to significantly boost earnings, with a target price of $40 per share based on a 10x EBITDA multiple, and a potential $50 per share based on a sum of the parts valuation. The NBA lockout presents a buying opportunity as resolution could catalyze stock price appreciation.
Did it work?
The long thesis targeted a re-rating from ~4.8x EBITDA toward a $40 share price, and the stock ultimately returned +1453% over ~15 years — roughly a 15x gain that dwarfs the stated target. The catalysts cited (NBA lockout resolution, Garden renovation boosting earnings) resolved favorably, and the company's sum-of-the-parts value was progressively unlocked, including later separations of the networks and entertainment businesses. With the stated horizon long since passed and the price far above the $40 target, the thesis decisively played out.