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Hedge Funds Are Betting On American Tower Corporation (REIT) (AMT)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Hedge funds’ top 3 stock picks returned 39.1% this year and beat the S&P 500 ETFs by nearly 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like American Tower Corporation (REIT) (NYSE:AMT).

American Tower Corporation (REIT) (NYSE:AMT) shareholders have witnessed an increase in hedge fund interest in recent months. Our calculations also showed that AMT isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the fresh hedge fund action surrounding American Tower Corporation (REIT) (NYSE:AMT).

What does smart money think about American Tower Corporation (REIT) (NYSE:AMT)?

Heading into the fourth quarter of 2019, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 42 hedge funds with a bullish position in AMT a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

AMT_nov2019

Among these funds, Akre Capital Management held the most valuable stake in American Tower Corporation (REIT) (NYSE:AMT), which was worth $1589.1 million at the end of the third quarter. On the second spot was Cantillon Capital Management which amassed $470 million worth of shares. Renaissance Technologies, Zimmer Partners, and Alkeon Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Akre Capital Management allocated the biggest weight to American Tower Corporation (REIT) (NYSE:AMT), around 15.67% of its portfolio. Claar Advisors is also relatively very bullish on the stock, designating 7.97 percent of its 13F equity portfolio to AMT.

As one would reasonably expect, some big names were breaking ground themselves. Bridgewater Associates, managed by Ray Dalio, established the largest position in American Tower Corporation (REIT) (NYSE:AMT). Bridgewater Associates had $21.9 million invested in the company at the end of the quarter. David Fiszel’s Honeycomb Asset Management also initiated a $11.1 million position during the quarter. The other funds with new positions in the stock are Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Parvinder Thiara’s Athanor Capital, and Mike Vranos’s Ellington.

Let’s also examine hedge fund activity in other stocks similar to American Tower Corporation (REIT) (NYSE:AMT). We will take a look at Diageo plc (NYSE:DEO), 3M Company (NYSE:MMM), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), and PetroChina Company Limited (NYSE:PTR). This group of stocks’ market valuations match AMT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DEO 22 930335 7
MMM 45 825815 5
PBR 30 2022999 -2
PTR 11 106487 2
Average 27 971409 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $971 million. That figure was $3646 million in AMT’s case. 3M Company (NYSE:MMM) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks American Tower Corporation (REIT) (NYSE:AMT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately AMT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AMT were disappointed as the stock returned -5% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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