Citadel Increases Investment in Sphere Entertainment

Citadel Advisors, the hedge fund controlled by Ken Griffin, more than tripled its investment in Sphere Entertainment (NYSE: SPHR).

A Schedule 13 G filing with the Securities and Exchange Commission (SEC) indicates Citadel has purchased more than 900,000 shares of Sphere since April, taking its stake in the operator of the Las Vegas entertainment venue to 5.3% from 1.6%. The hedge fund now owns about 1.5 million Sphere shares.

Sphere by Madison Square Garden Entertainment Corp., and the newly created company also holds the lucrative MSG Networks, which broadcast Knicks games, as well as Tao Group. Shares of Sphere have been on a torrid pace as of late, surging almost 38% over the past month. It’s estimated the company will report fiscal fourth-quarter results on Aug. 27.

Miami-based Citadel is one of the largest hedge funds in the world a point confirmed by Griffin’s of $37.6 billion. The money manager holds a dizzying array of equity positions, including put and call options, some of which feature are other names with Las Vegas Strip footprints. Citadel’s most recent 13F filing with the SEC indicates the hedge fund has stakes in Caesars Entertainment (NASDAQ: CZR), MGM Resorts International (NYSE: MGM), and Wynn Resorts (NASDAQ: WYNN), among other gaming stocks.

News of Citadel expanding its position in Sphere Entertainment arrived after it was reported that Steve Cohen’s Point72 Asset Management bought a 5.5% stake in the  company controlled by James Dolan and his family. Cohen is also the owner of the New York Mets.

Additionally, some sell-side analysts are increasingly warm to Sphere shares. In a new report to clients today, Benchmark Research started coverage of Sphere with a “hold” rating and no price target. The research firm called Sphere a “radically innovative” entertainment property, but noted the stock could be bogged down by the “less desirable” MSG Network, which broadcasts New York Knicks and Rangers games.

Benchmark added that while Sphere represents a transformative shift in the traditional entertainment venue model,” it’s still in its early innings and has not reached its full potential.

Earlier this month, Morgan Stanley boosted its price target on Sphere to $45 from $42. The consensus price forecast on the stock is $41.20, implying room for upside revisions with the stock currently trading north of $46.

While Sphere isn’t even a year old, the venue has already shown the ability to attract big acts, including U2 and Phish. The Eagles their number of performances at Sphere to 20 from eight. Those include four dates apiece in September, October, November, December, and January.

Aside from live concerts, “Postcards from Earth” has reportedly delivered $1 million in daily revenue for Sphere and the operator is looking to add two more documentaries to its menu one about U2 and another that’s a fresh take on the “Wizard of Oz.”