A ‘perfect business.’ Why investors may want to follow the Saudis into golf, says this strategist.

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,
-0.90%
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,
+3.76%
and Topgolf Callaway Brands
MODG,
+1.50%.
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,
+0.70%,
Big 5 Sporting Goods
BGFV,
+4.64%,
Vista Outdoor
VSTO,
+5.17%
and even Nike
NKE,
+0.85%.

The markets

Stock futures
ES00,
-0.08%

YM00,
-0.09%

NQ00,
-0.20%
are softer and the 10-year Treasury yield
TMUBMUSD10Y,
3.786%
is slightly higher at 3.802%. The dollar
DXY,
-0.31%
is weaker, while oil prices
CL.1,
+0.74%
are holding steady. It was a mostly softer day for Asia
NIK,
-0.85%

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

GameStop
GME,
+5.75%
shares slumped 19% after the retailer fired CEO Mike Furlong and said board elected activist investor Ryan Cohen as executive chairman.

Smartsheet
SMAR,
-5.15%
stock is off 17% on a disappointing outlook from the cloud-based work-management platform provider. But shares of chip maker Semtech
SMTC,
+1.54%
are up 25% on a surprise profit.

Oxford Industries
OXM,
+3.70%
fell 9% late Wednesday after the Tommy Bahama parent cut guidance.

In the footsteps of Netflix
NFLX,
+0.12%
and Disney
DIS,
+0.39%,
Amazon
AMZN,
-4.25%
is reportedly considering an ad-tiered service for Prime Video.

The week’s light data calendar ends weekly jobless claims at 8:30 a.m. and wholesale inventories at 10 a.m. The eurozone fell into a mild recession in the first quarter.

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.

The best of the web

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Ukrainians rescued from rooftops and flooded houses, as Russia’s war delivers another devastating blow.

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

The chart

After having been left behind for much of 2023, small-cap stocks have charged back in June, with the Russell 2000
RUT,
+1.78%
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:

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.:

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