Is Anterix (ATEX) A Smart Long-Term Buy?

Steel City Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 0.4% was recorded by the fund for the third quarter of 2021. Year-to-date, the Partnership gained 10.7%, net. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Steel City Capital, in its Q3 2021 investor letter, mentioned Anterix Inc. (NASDAQ: ATEX) and discussed its stance on the firm. Anterix Inc. is a New Jersey, United States-based wireless communications company with a $1.1 billion market capitalization. ATEX delivered a 62.13% return since the beginning of the year, while its 12-month returns are up by 83.45%. The stock closed at $61.32 per share on October 25, 2021.

Here is what Steel City Capital has to say about Anterix Inc. in its Q3 2021 investor letter:

“On 9/20, Anterix (ATEX) announced it entered into a long-term spectrum lease agreement with Midwest utility Evergy. The announcement represents the third utility contract that ATEX has signed within nine months. This should go a long way in quelling concerns about whether or not demand for the company’s spectrum exists.

The spectrum lease agreement covers 3.88 million people, or ~23.3 million MHz-Pops. The initial lease term runs 20- years, with two 10-year renewal options for additional payments. Evergy will pay ATEX $30.2 million for the initial 20-year term representing ~$1.30/MHz-Pop.

There’s a lot of ways to slice the announcement, all of which are positive. For starters, the $1.30/MHz-Pop valuation reflects a premium to last year’s Ameren contract, which ranged from $0.80-$1.07/MHz-Pop, depending on assumptions made around prepayment terms. ATEX management has been clear that Ameren received a “first-mover” discount, so the increase in pricing isn’t necessarily shocking, but it is a very welcome data point…” (Click here to see the full text)

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Based on our calculations, Anterix Inc. (NASDAQ: ATEX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ATEX was in 18 hedge fund portfolios at the end of the first half of 2021, compared to 16 funds in the previous quarter. Anterix Inc. (NASDAQ: ATEX) delivered a 4.29% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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