Chuck Akre’s ‘Three-Legged Stool’ Approach and His Top 5 Stock Picks

3. American Tower Corporation (NYSE:AMT)

Akre Capital Management’s Stake Value: $1.7 billion

Percentage of Akre Capital Management’s Portfolio: 12%

Number of Total Hedge Fund Holders: 50

American Tower Corporation (NYSE:AMT) is a Fortune-500 company headquartered in Massachusetts. It provides wireless communication services across the globe with over 220,000 sites worldwide. 

The company has been consecutively growing the dividend cash amounts it pays to its shareholders for 13 years. Its dividend yield as of Q1, 2022, stands at 2.28%. It is set to pay the next dividend cash amount on July 8, at $1.43 per share.

On June 5, American Tower Corporation’s coverage was resumed by BofA analyst, David Barden with a ‘Buy’ rating on the shares and a $315 price target.

The number of hedge funds holding equity in American Tower Corporation as of the first quarter of 2022 is 50, with Akre Capital Management being the leading stakeholder, holding shares worth $1.7 billion.

Qualivian Investment Partners mentioned American Tower Corporation in their Q3, 2021 investor letter. Here is what it said:

“What Attracts Us 

Superior Business:

• High barriers to entry resulting from low bargaining power of suppliers (land owners) and customers (wireless companies). Neither can find reasonable substitutes for existing cell towers. Combined with low possibility of disruption, this results in a business oligopoly and pricing power.
• Stable business with consistent high returns on equity, low maintenance capital required, and strong cash generation.

     − Ten-year, non-cancelable contracts with built in pricing escalators and high renewal rates

     − 1%-2% churn

Superior Reinvestment Opportunities:

• Strong growth for the foreseeable future due to increasing demand for wireless data usage, resulting in wireless carriers Capex equipment spend on existing and new towers.
• Low maintenance capital expenditure requirements; most of capital expenditure is for growth

Superior Management / Capital Allocation:

• Capital reinvested back in business has had returns well above cost of capital
• Company has purchased stock opportunistically…” (Click here to see the full text)