The Saudis shook up the golf world. Investors might want to pay attention.


The largely friendly U.S. neighbor who gave us Bob and Doug McKenzie and Tim Hortons’ doughnuts is bearing less welcome gifts as of late —- yellow New York skies and a rate hike that sparked a Fed meeting rethink. So it may be a grind between now and next week’s CPI data and Fed decision.

Our call of the day offers a distraction with a look at investing in the sport that sprung itself on Gen Xers via the flick “Caddyshack.” Yep, golf’s a hot topic following shock news that the Saudis have agreed to merge their LIV Golf circuit with the PGA Tour and Europe’s DP World Tour, a decision some in the U.S. are most unhappy about.

Bill Blain, strategist at U.K.-based Shard Capital, offers an explanation as to why this sport is back on the map and may be a spot for savvy investors. He notes in a Thursday post that dedicated clubs are filling up again, partly by wealthy work-from-home professionals, a far cry from years ago.

“Even idiots understand golf is a perfect business – like drugs. Donald Trump owns a couple up in Scotland, but uniquely, they are absolute money black holes,” he notes.

“Golf gives average folk enormous boons – it brings players esteem, happiness, a sense of purpose, and a forgetfulness about how much money they are prepared to spend trying to achieve the same golf-ball accuracy a few genetically freakish professional players seem able to achieve every game. A golf addict will spend any amount to be like them,” he said.

The Saudis, Blain said, “will spend billions, but could potentially reap trillions if they have called the global sporting zeitgeist correctly.” And while they failed to nab soccer giant Lionel Messi, the neighboring Qataris did manage a decent World Cup, he adds.

It’s a message even beyond golf. “Personally, if I can find a way to invest in the future of global sport — then I will be all over it like a rash,” he says. “Some sports are already massive business opportunities – and that will widen as AI and leisure time change our priorities. Monetizing the value of sporting franchises through the media and merchandising is massive in the USA – the key thing being viewers paying to watch.”

Blain points out that following last season’s Formula One FWONK, +3.89% racing, he found himself buying books on F1 engineering, reawakened by TV and media coverage. Expect the Netflix documentary “Full Swing” about pro golf players to help out, he said.

How does one put a few pennies into the potentially future lucrative world of golf? Jefferies analysts on Wednesday pointed out to clients snappy performances this week of golf equipment holders Acushnet GOLF, -2.27% and Topgolf Callaway Brands MODG, -1.28%. Analyst Randal Konik said the Saudi investment “will enable the newly formed company to embark on ambitious initiatives aimed at expanding the reach of golf and cultivating a broader following.”

The Stock Dork offered these golf plays up earlier in the year: Dick’s Sporting Goods DKS, -0.32%, Big 5 Sporting Goods BGFV, +0.36%, Vista Outdoor VSTO, -1.35% and even Nike NKE, -0.83%.

The markets

Stock futures ES00, -0.10% YM00, -0.16% are mixed, with Nasdaq-100 futures NQ00, -0.06% up about 0.2%, while the 10-year Treasury yield TMUBMUSD10Y, 3.727% is steady at 3.792%. The dollar DXY, -0.02% is weaker, while oil prices CL.1, -0.79% are holding steady. It was a mostly softer day for Asia NIK, +0.89% HSI, +0.25%.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Jobless claims climbed to a 21-week high of 261,000. Wholesale inventories are still to come at 10 a.m. The eurozone fell into a mild recession in the first quarter.

GameStop GME, -17.89% shares slumped 19% after the retailer fired CEO Mike Furlong and said board elected activist investor Ryan Cohen as executive chairman.

Smartsheet SMAR, -17.47% stock is off 17% on a disappointing outlook from the cloud-based work-management platform provider. But shares of chip maker Semtech SMTC, +4.86% are up 25% on a surprise profit.

Oxford Industries OXM, -5.79% fell 9% late Wednesday after the Tommy Bahama parent cut guidance.

In the footsteps of Netflix NFLX, +2.40% and Disney DIS, +0.01%, Amazon AMZN, +2.49% is reportedly considering an ad-tiered service for Prime Video.

New York plans to distribute 1 million free N95 masks Thursday amid hazardous smoke levels from Canadian wildfires, that has created the worst air quality in the world.

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Many of Russia’s political and business elite see war as unwinnable and want it to stop.

Google plans a crackdown on workers who want to come into the office

The chart

After having been left behind for much of 2023, small-cap stocks have charged back in June, with the Russell 2000 RUT, -0.41% up nearly 8% on the month, versus a 2% gain for the S&P 500. This Bespoke Investment chart takes a look at similar performances over history that may shed light on what’s ahead:

Bespoke Investment Group

Their bar chart compares median performances of the Russell 2000 and S&P 500 after an initial five-day period of small-cap outperformance. Over the short term, that seems to continue, but three months later things start to even out. Six and 12 months later, the S&P 500 starts to outperform again.

“Not only that, but six months later, the S&P 500 outperformed the Russell 2000 six out of seven times, and 12 months later, large-caps outperformed small-caps five out of seven times, said Bespoke.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker Security name
TSLA, +4.58% Tesla
GME, -17.89% GameStop
NVDA, +2.76% Nvidia
PLTR, +3.40% Palantir Technologies
AAPL, +1.55% Apple
AMC, -1.06% AMC Entertainment
NIO, +0.39% NIO
BUD, -0.16% Anheuser-Busch InBev
AMZN, +2.49%
MULN, -9.60% Mullen Automotive

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