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Hedge Funds Have Never Been More Bullish On American Tower (AMT)

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards American Tower Corporation (REIT) (NYSE:AMT) and determine whether hedge funds skillfully traded this stock.

American Tower Corporation (REIT) (NYSE:AMT) investors should pay attention to an increase in hedge fund sentiment recently. American Tower Corporation (REIT) (NYSE:AMT) was in 61 hedge funds’ portfolios at the end of June. The all time high for this statistics was previously 61 (reached in 2017Q1). This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AMT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most investors, hedge funds are assumed to be underperforming, old financial vehicles of the past. While there are over 8000 funds trading today, Our experts hone in on the crème de la crème of this group, about 850 funds. These hedge fund managers watch over the lion’s share of the hedge fund industry’s total capital, and by tracking their finest equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s take a look at the key hedge fund action regarding American Tower Corporation (REIT)(NYSE:AMT).

What have hedge funds been doing with American Tower Corporation (REIT)(NYSE:AMT)?

Heading into the third quarter of 2020, a total of 61 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the first quarter of 2020. On the other hand, there were a total of 42 hedge funds with a bullish position in AMT a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Among these funds, Akre Capital Management held the most valuable stake in American Tower Corporation (REIT)(NYSE:AMT), which was worth $1819.6 million at the end of the third quarter. On the second spot was Cantillon Capital Management which amassed $542.6 million worth of shares. Fisher Asset Management, Alkeon Capital Management, and AQR 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 13.71% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, designating 9.71 percent of its 13F equity portfolio to AMT.

As aggregate interest increased, key hedge funds were breaking ground themselves. Fisher Asset Management, managed by Ken Fisher, created the biggest position in American Tower Corporation (REIT) (NYSE:AMT). Fisher Asset Management had $455.5 million invested in the company at the end of the quarter. Jaime Sterne’s Skye Global Management also made a $24 million investment in the stock during the quarter. The other funds with brand new AMT positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Joel Greenblatt’s Gotham Asset Management, and Minhua Zhang’s Weld Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to American Tower Corporation (REIT) (NYSE:AMT). These stocks are Shopify Inc (NYSE:SHOP), Linde plc (NYSE:LIN), Philip Morris International Inc. (NYSE:PM), International Business Machines Corp. (NYSE:IBM), Citigroup Inc. (NYSE:C), Charter Communications, Inc. (NASDAQ:CHTR), and Wells Fargo & Company (NYSE:WFC). This group of stocks’ market valuations resemble AMT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SHOP 57 5916379 14
LIN 52 3643095 -1
PM 53 2574980 5
IBM 46 918051 5
C 96 6229205 10
CHTR 96 11227561 -8
WFC 86 10344809 10
Average 69.4 5836297 5

View table here if you experience formatting issues.

As you can see these stocks had an average of 69.4 hedge funds with bullish positions and the average amount invested in these stocks was $5836 million. That figure was $4407 million in AMT’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand International Business Machines Corp. (NYSE:IBM) is the least popular one with only 46 bullish hedge fund positions. American Tower Corporation (REIT) (NYSE:AMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMT is 54. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th and surpassed the market by 20.6 percentage points. Unfortunately AMT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AMT investors were disappointed as the stock returned -5.1% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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