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CUBE's Stock Pick is...

TKO Group Holdings (TKO)

TKO, formed in September 2023, represents a combination of the WWE and the UFC. CUBE is already up on this position but we believe the stock has continued upside based on our models (for subs to see only) due to significant synergies and growth potential.

Put briefly, we remain even more bullish on the stock over the long-term after major record breaking back-to-back weekends from Wrestlemania 40 and UFC 300.

We believe WWE's recently announced $5B deal with NFLX beginning in January 2025 will also lead to increased adoption of the brand and are even more excited about the upcoming contract renewal for the UFC which should see a huge step up from the $1.5B deal done with Disney back in 2018. Coupling this Conor Mcgregor's return to the Octagon in the summer, we think TKO has a lot of favorable tailwinds at their back.

With regards to valuation, we also view 13x this year's EBITDA and 11x next year's figures as attractive given names like Formula 1 and MSG Sports trade at considerably higher multiples. Furthermore, TKO's $600M+ in annual free cash flow allows for continued deleveraging of the balance sheet and gives the company greater capital allocation flexibility - whether that's in the form of share buybacks, more frequent dividends, or accretive M&A.

As promised, if TKO does not outperform the S&P500 from April 22nd through July 22nd, CUBE will give everyone on this newsletter a 50% discount to a CUBE subscription! If it outperforms, then we look forward to you joining so we can present other investment ideas!

Keep in mind, CUBE invests over the long-term with our average stock being held for over 4 years. The reason we are choosing 3 months is because we don't want you to wait 4 years for a potential discount lol.

And lastly, this is not investment advice. Feel free to watch the stock from the sidelines. CUBE simply wanted to put our pick on the line and make it public!

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