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Insider Buying Lifts Madison Square Garden

David Becker
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Madison Square Garden (NASDAQ:MSG) is engaged in sports, entertainment, and media businesses in the United States. It operates through three segments: MSG Media, MSG Entertainment, and MSG Sports.

The stock has been under pressure recently after soaring since its IPO. Yet while the stock has had a good run, turbulence has hit MSG lately, and particularly so after its recent earnings report. This most recent report actually marked the first time that MSG had missed estimates in more than two years.

The 52-week range of MSG is $48.16- $60, and the stock hit a fresh 52-week high in March of 2014. Earnings declined 51% quarter over quarter, but the three-year growth rate of earnings was a positive 29%. Sales increased 11% year over year, and the three-year growth rate of sales was up 9%.

Recent insider buys should give investors’ confidence. Chief Executive Officer Thomas Smith purchased approximately 26K shares of the company stock on May 6, 2014 for total proceeds of approximately 1.3 million dollars.

The technical picture shows a stock that has been hammered, and has dropped more than 10% in the past two weeks. Momentum has turned positive as the MACD (moving average convergence divergence index) generated a buy signal. This occurs when the spread (the 5-day moving average minus the 13-day moving average) crosses above the 6-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

The RSI (relative strength index) moved higher with price action reflecting accelerating positive momentum. The RSI on MSG was recently printing below the oversold trigger level of 30, and the move higher to 34, represents a bullish outlook.

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