Sports-related shares are running up the score against the stock market as the return of games and the embrace of betting makes investors as enthusiastic as fans. The JohnWallStreet Index has advanced more than 17.2% since its inception at the start of August. By comparison, the S&P 500 has gained 2.6% in that time, while the tech-heavy Nasdaq 100 Index has posted a 1.7% gain.
“Enthusiasm for sports-related stocks fits into the broader narrative. Optimistic investors are beginning to look at life beyond the lockdown,” said Jack Ablin, Chief Investment Officer and founding partner of Cresset Capital, a wealth management firm in Chicago. “Let’s hope they’re right.”
The JohnWallStreet Index is Sportico’s basket of 40 publicly traded sports team- and sports-related stocks. The index began at 1,000 points based on the close of trading July 31 and has risen 172.4 points in six weeks. It’s a period that has seen all the major North American sports playing in some form, including playoffs in the NBA, WNBA and NHL as well as regular season action in baseball, football and soccer.
The ability to place wagers on play again has made gaming stocks the biggest winners. Penn National Gaming (Ticker: PENN), which owns casinos and racetracks as well as a 36% stake in Barstool Sports, is up 111%. William Hill (WIMHY), the world’s largest bookie, has advanced 108%. PointsBet (PBTHF), Australia’s largest gaming operator with significant operations in the U.S., increased 95%—good for third. Scientific Games (SGMS), a gaming technology maker for casinos, lotteries and apps, posted a 73% gain overall, including an incredible 63% surge this week. The Las Vegas-based company saw investors nearly giddy on news that billionaire takeover artist and Scientific Games chairman Ronald Perelman is selling his long-held stake in the company.
It’s not just gambling that is powering the index. The JohnWallStreet Index components are equally weighted with each stock entering as 2.5% of the index—to better capture the broad-based performance of the sports business. It shows nearly every segment is on the rise. Fully 15 other components are up double-digits since the start of August, including sports card grading firm Collectors Universe (CLCT, up 41%), Premier League fixture Manchester United (MANU, up 17%) and The Walt Disney Co., owner of ESPN and other sports-related properties (DIS, up 10%).
Only nine JohnWallStreet stocks are down for the period, including both sports video game stocks on the index—Electronic Arts (EA, down 12%) and Activision (ATVI, down 5%). The biggest decliner is Hall of Fame Village (HOFV), which has shed more than 30% of its value. The company is developing a mixed-use real estate project adjacent to the Pro Football Hall of Fame in Canton, Ohio, and went public by a blank-check company, or SPAC, this summer. Shares are suffering in part from an exodus of shareholders who bought into the SPAC when it had a stated aim of buying a financial technology company.
While sports stocks have been thriving this summer, there is evidence the market-beating performance isn’t a fluke or just the result of restarted play. A review of past performance of the index shows that it has beaten the S&P every calendar year to date since 2015, including this year. Over the past five years through June, the JohnWallStreet Index has beaten the S&P by nearly 10 percentage points, returning 92% to the S&P’s 82.5% in that time.
You can read more about the JohnWallStreet Index, including a list of its components, here. We’ll be writing regularly about the index, the stocks that comprise it, and how it reflects the sports business and investing world more broadly.