Editor's note: Today in the Chaikin PowerFeed, our friend Sean Michael Cummings is back... Longtime readers are familiar with Sean. He's an analyst at our corporate affiliate, Stansberry Research. And we occasionally share insights from him here at the Chaikin PowerFeed.
Editor's note: Today in the Chaikin PowerFeed, our friend Sean Michael Cummings is back...
Longtime readers are familiar with Sean. He's an analyst at our corporate affiliate, Stansberry Research. And we occasionally share insights from him here at the Chaikin PowerFeed.
This essay from Sean was published in the August 17 edition of Stansberry's free DailyWealth e-letter. In it, he talks about how a wealth-status symbol is turning into an investment vehicle that AI can't touch...
A Truly Scarce Asset in Algorithmic America
By Sean Michael Cummings, analyst, Stansberry Research
To basketball fans, it probably feels like déjà vu...
On August 12, reports came out that the Los Angeles Lakers will be sold for $12.5 billion... making it the most valuable U.S. sports team in history.
But the last time the Lakers changed hands was only 10 months ago.
That deal closed in October for $10 billion. And that made the Lakers the highest-valued U.S. sports team at the time, too.
So why the quick turnaround? It has to do with Mark Walter, CEO of global investment firm Guggenheim Partners...
Walter was the one who bought the Lakers from the Buss family last year. (They had owned the team since 1979.) But Walter has since come under fire. The Department of Justice is investigating his loan book. According to Bloomberg, he's now selling the Lakers as part of a larger effort to clean up his balance sheets.
If the NBA's board of governors approves the deal, control of the Lakers will pass to a new pair of investment-world elites... former Disney CEO Bob Iger and venture-capital investor Josh Kushner.
This buyout is the latest in a larger economic trend. Sports-team values have gone sky-high. And as I'll explain today, it's happening because two forces are aligning in the market...
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A New Phase for Sports Franchises
The team-ownership model is changing.
Traditionally, sports teams were bought by billionaires who kept them as trophy assets. Teams were status symbols... And the wealthy would pass ownership down through the family for generations.
Last December, the NBA changed its rules to allow investment firms to buy equity in up to eight franchises – a jump from the previous limit of five.
At the same time, AI has revealed something important about major-league sports teams: They're scarce assets.
The drama and excitement of a pro sports event cannot be replicated by technology. As Sportico recently reported, that's a rare quality in a world where AI is recreating all kinds of content. And it has made sports teams look like a reliable way to make money.
These two factors have propelled team values to surprising heights. Take a look at the biggest sports-team sales since 1989...
If approved, the new Lakers sale will be the latest in this trend. And it shows just how strong the tailwinds in pro sports are today. Because of his financial problems, Walter probably had little negotiating power – yet he still made a 25% profit in 10 months.
Only some teams offer publicly traded equity... but we can see the trend in the public markets, too. Just consider the Atlanta Braves (BATRA)...
The Braves have been a professional baseball team since 1871. That's the longest uninterrupted streak of any sports franchise in North America. And notably, they're one of only a handful of major league franchises trading on a stock exchange.
Today, BATRA is hovering near all-time highs. Take a look...
BATRA has soared 33% year to date. And with sports franchises trending upward, this stock has room to run.
The Lakers and the Braves are both telling the same story...
The value of big-league teams is rocketing higher because sports are among the few things left that technology can't replace. That scarcity is valuable. It gives sports-team owners a lot of pricing power.
Sports teams are still status symbols... But now, they're becoming investment vehicles for the wealthy.
Expect more teams to turn into acquisition targets from here. We're likely at the start, not the end, of private capital flooding into sports.
Good investing,
Sean Michael Cummings
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.26%
11
14
5
S&P 500
+0.21%
123
264
105
NASDAQ
-0.20%
26
56
17
Small Caps
+0.50%
575
1016
325
Bonds
+1.67%
Pharmaceuticals, Biotechnology and Life Sciences
+5.90%
48
82
15
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Health Care
+4.30%
Energy
+4.18%
Staples
+1.72%
Real Estate
+1.12%
Communication
+0.95%
Discretionary
+0.59%
Utilities
+0.41%
Materials
-0.11%
Financial
-0.76%
Industrials
-2.11%
Information Technology
-2.76%
* * * *
Industry Focus
Innovative Technology
57
32
7
Over the past 6 months, the Innovative Technology subsector (XITK) has outperformed the S&P 500 by 22.38%. Its Power Bar ratio which measures future potential is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #5 of 21 subsectors and has moved up 1 slots over the past week.
Top Stocks
ANET
Arista Networks, Inc.
AVPT
AvePoint, Inc.
BILL
BILL Holdings, Inc.
* * * *
Top Movers
Gainers
MRNA
+176.97%
EL
+16.30%
MRK
+12.60%
ARE
+10.27%
MRVL
+9.85%
Losers
STX
-7.87%
STLD
-7.53%
WDC
-6.87%
DELL
-6.64%
LRCX
-6.33%
* * * *
Earnings report
Earnings Surprises
COTY Coty Inc.
Q4
$-0.02
Missed by $-0.01
TGT Target Corporation
Q2
$4.11
Beat by $1.77
EL The Estée Lauder Companies Inc.
Q4
$0.39
Beat by $0.07
BILL BILL Holdings, Inc.
Q4
$0.84
Beat by $0.13
VIK Viking Holdings Ltd
Q2
$1.31
Beat by $0.07
* * * *
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