Sphere Entertainment Co. (SPHR) Rose on Robust Operating Results

Ariel Investments, an investment management company, released its “Ariel Small Cap Value Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2024, US indexes continued to exceed expectations. This rally was fueled by excitement surrounding artificial intelligence (AI), robust corporate earnings growth, declining inflation, and expectations for interest rate cuts. In this backdrop, Ariel Small Cap Value Tax-Exempt Composite rose +3.97% gross of fees (+3.71% net of fees) and outperformed the +2.90% return of the Russell 2000 Value Index but fell short of the +5.18% gain of the growthier Russell 2000 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Ariel Small Cap Value Strategy highlighted stocks like Sphere Entertainment Co. (NYSE:SPHR), in the first quarter 2024 investor letter. Sphere Entertainment Co. (NYSE:SPHR) engages in the entertainment business. Sphere Entertainment Co.'s (NYSE:SPHR) one-month return was -8.48%, and its shares gained 47.56% of their value over the last 52 weeks. On June 5, 2024, Sphere Entertainment Co. (NYSE:SPHR) stock closed at $37.76 per share with a market capitalization of $1.334 billion.

Ariel Small Cap Value Strategy stated the following regarding Sphere Entertainment Co. (NYSE:SPHR) in its first quarter 2024 investor letter:

"Several stocks in the portfolio had strong returns in the quarter. Shares of live entertainment, media and technology company, Sphere Entertainment Co. (NYSE:SPHR) jumped during the period. SPHR’s first full quarter of operating results were robust. Revenue and margins beat expectations driven by the strong performance of the Sphere’s experience show, Postcard from Earth, sellout crowds at the U2 concerts and a highly profitable takeover of the Sphere by F1. Additionally, events such as the Consumer Electronics Show and Super Bowl in Las Vegas, are expected to aid advertising and sponsorship revenues from the Exosphere (the Sphere's exterior). Meanwhile, the CEO purchased a significant number of shares, underscoring his confidence in the company as well as its ability to secure global franchise partners for future Sphere models. Although the Las Vegas venue will take some time to reach its full potential, the company is well on its way to having events 365 days a year including concert residencies, marquee sporting and corporate events, and Sphere Experience exhibits. In our view, the Sphere’s new experiential immersive venue and the company’s two regional sports and entertainment networks present a long-term opportunity, which remains meaningfully underappreciated at current trading levels."

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Sphere Entertainment Co. (NYSE:SPHR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. Sphere Entertainment Co. (NYSE:SPHR) generated total revenues of approximately $321 million and adjusted operating income of $61.5 million for the fiscal ’24 third quarter. While we acknowledge the potential of Sphere Entertainment Co. (NYSE:SPHR) 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 another article, we discussed Sphere Entertainment Co. (NYSE:SPHR) and shared Greenhaven Road Capital's views on the company. In addition, please check out our hedge fund investor letters Q1 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.