This story appears in the December 30, 2018 issue of Forbes. Subscribe
There’s a fine line in hunting for undervalued companies or plowing into “value traps” that wind up as the next Sears. Guru Jonathan Boyar, president of $200 million-in-assets Boyar Value Group, has ably navigated this by uncovering “fallen angel” stocks, former market darlings that are set for recovery or those that have hidden assets due for a spotlight, often from spin-offs.
With stellar picks like the split of PayPal from eBay in 2014, Boyar’s annual “Forgotten Forty” list of undervalued picks has posted a compound annual return of 14.8% over the past ten years, beating the S&P 500 Index by 3.4% per year. Boyar offers Forbes three conviction ideas for 2019:
JPMorgan Chase
After the “Trump bump,” bank stocks underperformed the S&P 500 despite the rising rate environment. Boyar favors Jamie Dimon’s industry bellwether for its healthy balance sheet, above average 14% return on equity and 3% dividend yield. Berkshire Hathaway’s recent buys heighten Boyar’s conviction, along with the low-price entry point available after a sharp second half sell-off.
Madison Square Garden
His New York Knicks shoot bricks, but James Dolan has scored some points on the public markets over the years after splitting Madison Square Garden from the family cable empire. He opportunistically sold the latter in 2016 ahead of cable cord-cutting woes and has separated sports broadcasting networks from Madison Square Garden, which owns sports franchises and real estate like MSG and Radio City Music Hall. He plans to spin off the Knicks and NHL’s Rangers in 2019; Boyar sees sports nuts bidding up MSG.
Liberty Braves
A means to bet on pro baseball and invest with cable billionaire John Malone. Boyar values the company at $37, nearly 50% above its recent trading price, thanks to rising TV revenue, legalized sports gambling and Liberty-owned real estate development near the Atlanta Braves’ ballpark.
