Endeavor Group Gets Nod from Cathie Wood’s ARK Invest, Shares Rise

Posted on: December 15, 2021, 01:10h. 

Last updated on: December 15, 2021, 02:08h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Endeavor Group Holdings, Inc. (NYSE:EDR), the parent company of the Ultimate Fighting Championship (UFC), have received an endorsement from a well-known investor. Cathie Wood’s ARK Investment Management stepped into the stock yesterday.

Endeavor stock
ARK Invest founder Cathie Wood, seen above. Her firm added shares of Endeavor stock to one of its ETFs. (Image: Kyle Grillot/Bloomberg)

The New York-based exchange traded funds issuer bought nearly 178,000 shares of Endeavor on Tuesday, directing that purchase to the ARK Next Generation ETF (NYSEARCA:ARKW). Endeavor stock, which is up 19.17 percent year-to-date, traded higher today following the ARK purchase, gaining 1.2% on volume that was above the daily average.

Endeavor isn’t a pure play gaming company, nor does it accept wagers from bettors. But it is increasing its footprint on the businesses-to-business side of the industry.

In September, the company announced the $1.2 billion cash and equity purchase of the OpenBet sports wagering service from Scientific Games (NASDAQ:SGMS). Endeavor also operates IMG Arena, which provides streaming video and data services to sportsbooks, indicating there are potential synergies by adding OpenBet to the mix.

Endeavor Stock Reasonable Addition to ARKW

The $4.74 billion ARKW is an actively managed fund, meaning it has holdings-level flexibility. The seven-year old fund has long focused on artificial intelligence, big data, cloud computing, e-commerce, and social media names, among others.

However, Endeavor is one of four stocks in the fund with gaming exposure. ARKW is one of the largest ETF owners of DraftKings (NASDAQ:DKNG) and Genius Sports (NYSE:GENI) and also has a position in mobile games developer Skillz (NYSE:SKLZ), indicating Endeavor is a reasonable addition to the ARKW portfolio.

That quartet of gaming equities combines for about 5.4 percent of ARKW’s weight.

Endeavor also owns the Professional Bull Riders (PBR) and Euroleague. But the aforementioned IMG Arena business and the company’s growing sports betting exposure validates its inclusion in ARKW.

Evaluating Endeavor

Endeavor stock is higher by 8.8 percent over the past month, indicating ARK is buying into strength in the sports and entertainment name.

In addition to expanding its sports wagering exposure, the company recently created Diamond Baseball Holdings (DBH), which it’s using to acquire minor league baseball teams.

Last week, DBH announced the acquisitions of Triple-A affiliates of the Chicago Cubs, New York Yankees, and the St. Louis Cardinals, as well as the purchases of the Yankees’ High-A affiliate and the San Francisco Giants’ Single-A club.

Endeavor also has a pending deal to run four minor league teams attached to the World Series champion Atlanta Braves.

“Endeavor is also in late stage negotiations with a handful of other significant franchises and expects to announce those developments in due course,” according to the company.