So Much for MSG's Linsanity

Shares of Madison Square Garden (NYSE: MSG  ) are trading within pocket change of a new all-time high, and it's hard to see why.

Last month's Jeremy Lin storybook run is over. The New York Knicks are winless this month, and the once-ballyhooed basketball team is likely to lose its sixth game in a row when it plays the league-leading Bulls in Chicago tonight.

The Knicks were once hoping that Linsanity would propel the battered franchise into its first deep playoff run in ages. Now the team is barely clinging to the eighth and final seed in its conference.

Madison Square Garden's run began last month when Lin came out of seemingly nowhere to lead his team on an unlikely winning streak. The stock closed higher on nine consecutive trading days during the peak of Lin's stardom.

As many feared, the Knicks have stumbled back into sub-mediocrity now that key starters are back and Lin is no longer the focal point of the team's offense. His own defensive shortcomings and knack for turnovers have also been woefully exposed.

The Knicks are who we thought they were -- so why is Madison Square Garden winning this month even as its team is losing?

Well, win or lose the Knicks are exciting again -- and that's good news for the MSG sports network. It was able to cash in during the peak of the Lin craziness to broker a new deal with Time Warner Cable (NYSE: TWC  ) to begin carrying the blacked-out station again. The dynamic storylines of this season will also carry into the next NBA season, even if the team sputters its way out of the playoffs during the final two dozen games of the season.

It remains to be seen whether the other Lin stock plays will bear fruit. As a Nike (NYSE: NKE  ) signee, we'll have to see if Nike feels that the market is there to put out an official line of Jeremy Lin shoes later this year. SINA's (Nasdaq: SINA  ) Weibo -- China's top micro-blogging website -- was ablaze last month with new followers for Lin's Weibo account. It's closing in on an amazing 2.5 million followers, but is the buzz still there?

Madison Square Garden's stock may be ripe for a pullback if the team fails to clinch the final playoff spot. The team and venue would forgo the additional revenue stemming from the playoff games, and the MSG sports network would lose viewers if the team is eliminated from postseason contention sooner rather than later.

However, the team and company are in a better place than they were a year ago. Just be careful in chasing a stock where the underlying fundamentals (you know -- the team's performance) appear to have peaked weeks before the stock.

Buzzer-beater
Basketball isn't the only popular American export overseas. A new report details three American companies destined to dominate the world. Want to know the three companies? A free report will get you up to speed. Check it out now.

The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, SINA, and Nike. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended creating a diagonal call position in Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1812023, ~/Articles/ArticleHandler.aspx, 7/30/2014 1:22:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement