What will be the Impact of Six Flags Entertainment Corporation (FUN)-Cedar Fair Merger?
Investment management company Cove Street Capital recently released its “Small Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund returned -10.77% (net of fees) compared to -3.28% for the Russell 2000 Index and -3.64% for the Russell 2000 Value Index. For the first half of 2024, the S&P 500 is up 15%. Its biggest component, Nvidia, has increased by 150% over that time. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Cove Street Capital Small Cap Value Fund highlighted stocks like Six Flags Entertainment Corporation (NYSE:FUN) in the second quarter of 2024 investor letter. Six Flags Entertainment Corporation (NYSE:FUN) operates amusement resorts consisting of amusement parks, water parks, and resort properties. The one-month return of Six Flags Entertainment Corporation (NYSE:FUN) was 11.26%, and its shares gained 38.64% of their value over the last 52 weeks. On July 11, 2024, Six Flags Entertainment Corporation (NYSE:FUN) stock closed at $51.99 per share with a market capitalization of $5.206 billion.
Cove Street Capital Small Cap Value Fund stated the following regarding Six Flags Entertainment Corporation (NYSE:FUN) in its Q2 2024 investor letter:
"Six Flags Entertainment Corporation (NYSE:FUN) announced its intention to merge with Cedar Fair in November 2023. Conceptually, schlepping more parks together in a combined entity should generate value beyond cost cutting via regional diversification, a more stable balance sheet, stronger season pass sales, combining IP and brand rights, streamlining best practices, and other incremental upsells/cross sells. While we lament the foregoing of a higher upside case in “fixing” Six Flags via premiumization, the combined entity will be managed by the much more capable leadership team coming from Cedar Fair. The cone of variability has narrowed, and we see a go-forward entity that operates scarce, difficult to replicate regional park assets that should generate a lot of cash. There has been antitrust concern since the announcement of the merger; those concerns did not come to pass, and the merger will close on July 1."
A bird's eye view of an amusement park with rides and attractions.
Six Flags Entertainment Corporation (NYSE:FUN) is not on our list of 31 Most Popular Stocks Among Hedge Funds. While we acknowledge the potential of Six Flags Entertainment Corporation (NYSE:FUN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.