Summary
- The position was diminished by 72.17%.
- Manchester United reported 152.8 million in revenue but a 27.7 million net loss.
- Global membership sales and season ticket renewals for the company reached records.
Baron Capital Management’s CEO, Ron Baron (Trades, Portfolio), announced earlier this week that his company had reduced its investment in Manchester United PLC (MANU, Financial) by 72.17 percent.
The New York-based company of the guru uses a bottom-up research methodology to identify small and mid-size growth companies with long-term potential and significant competitive advantages that are currently trading at attractive prices. The Baron Asset Fund, Baron Growth Fund, and Baron Partners Fund are all managed by Baron, who is renowned for ignoring short-term market fluctuations, particularly when he thinks the fundamental reasons for buying the stock have not changed.
After reducing the position during the first quarter, Baron sold an additional 4.03 million shares of the U.K.-based company on June 30, according to GuruFocus Real-Time Picks, a Premium feature based on 13D and 13G filings. This had a negative impact on the equity portfolio, which was down by 0.11 percent. On the day of the transaction, the stock traded for an average price of $11.12 per share.
1.5 million shares of Manchester United, or 0.04 percent of the equity portfolio, are currently held by the company. Data from GuruFocus reveals that since starting the investment in the fourth quarter of 2012, Baron has reportedly lost an estimated 10.52 percent of it.
Its shares were trading around $10.92 on Thursday with a price-book ratio of 6.38 and a price-sales ratio of 2.36. The company, which runs the same-named professional soccer club along with its related ancillary activities, has a $1.78 billion market cap.
The GF Value Line VALU shows the stock, while undervalued, is currently a potential value trap based on its historical ratios, past financial performance, and projected future earnings. As a result, prospective investors should conduct careful research before choosing.
Additionally, it has a low GF Score of 67 out of 100, indicating that the stock has a poor chance of performing well in the future. High marks for GF Value, average rankings for profitability and momentum, and poor rankings for financial strength and growth were given to the company.
On May 26, the business released its third-quarter 2022 financial results, announcing revenue of 152.8 million pounds ($183.4 million) and a net loss of 27.7 million pounds, or 17.01 pence per share.
Richard Arnold, the CEO of Manchester United, said in a statement that the club’s revenue has “continued to recover from the pandemic, reflecting the enduring strength of our commercial operations, which in turn support our ability to continue investing in the Club.”
The company reported record renewals of season tickets and executive club memberships for the 2022–23 season in addition to reporting record global membership sales for the 2021–22 season.
Arnold also talked about the men’s first team’s “disappointing season,” in which it finished sixth.
Resilience and high standards are core values for Manchester United, and we are determined to achieve better results next season and beyond. Work is well underway to address this, led by our Football Director, John Murtough, and our new manager, Erik ten Hag, he added.
Manchester United’s financial health was rated three out of ten by GuruFocus. The low Altman Z-Score of 0.67 warns the company could be at risk of bankruptcy if it does not improve its liquidity position, in addition to debt-related ratios that are underperforming in comparison to other diversified media players.
Although the company’s margins and returns are negative and underperform the majority of competitors, its profitability fared slightly better, receiving a 5 out of 10 rating. Additionally, Manchester United has a moderate Piotroski F-Score of 4 out of 9, which indicates that business conditions are typical for a stable company. However, due to a drop in revenue per share, the predictability rank of one out of five stars is under review. Companies with this rank returned an average of 1.1 percent annually over a ten-year period, according to GuruFocus research.
With a 7.54 percent stake, John Rogers (Trades, Portfolio) is the company’s biggest guru shareholder. Renaissance Technologies, a company owned by Jim Simons (Trades, Portfolio), also owns shares of Manchester United.
Portfolio structure and output
As of March 31, Baron’s $40.74 billion equity portfolio, which consisted of 387 stocks, was heavily weighted toward the consumer cyclical, technology, and financial services industries.
According to the 13F filing for the first quarter of 2022, the media guru also owned Liberty SiriusXM Group, Liberty Formula One Group, Madison Square Garden MSG Sports Corp., Madison Square Garden Entertainment Corp., Innovid Corp., and Madison Square Garden Entertainment Corp. (LSXMK, Financial).
The Baron Partners Fund, according to its website, outperformed the S&P 500 in 2021, returning 31.73 percent as opposed to the index’s 28.7 percent.
Investors should be aware that while 13F filings only include a company’s positions in American depository receipts and U.S. stocks, they still contain useful information and do not provide a complete picture of a company’s holdings. Additionally, the reports only include trades and holdings as of the most recent portfolio filing date, which may or may not correspond to the reporting firm’s position as of the current day or even the publication date of this article.
Disclosures
I/we do not currently hold any positions in the stocks mentioned, and we do not currently have any plans to initiate any new positions within the next seventy-two hours.
