Were Hedge Funds Right About American Tower Corporation (REIT) (AMT)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards American Tower Corporation (REIT) (NYSE:AMT).

Is American Tower Corporation (REIT) (NYSE:AMT) the right pick for your portfolio? The smart money is getting less bullish. The number of bullish hedge fund bets went down by 6 in recent months. Our calculations also showed that AMT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). AMT was in 46 hedge funds’ portfolios at the end of December. There were 52 hedge funds in our database with AMT holdings at the end of the previous quarter.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Louis Navellier of Navellier & Associates

Now let’s check out the latest hedge fund action encompassing American Tower Corporation (REIT) (NYSE:AMT).

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

At Q4’s end, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AMT over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Akre Capital Management, managed by Charles Akre, holds the biggest position in American Tower Corporation (REIT) (NYSE:AMT). Akre Capital Management has a $1.6515 billion position in the stock, comprising 15.1% of its 13F portfolio. The second most bullish fund manager is Cantillon Capital Management, managed by William von Mueffling, which holds a $478.4 million position; the fund has 4.4% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Stuart J. Zimmer’s Zimmer Partners, Renaissance Technologies and Ken Griffin’s Citadel Investment Group. 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 15.14% of its 13F portfolio. Selkirk Management is also relatively very bullish on the stock, designating 6.74 percent of its 13F equity portfolio to AMT.

Since American Tower Corporation (REIT) (NYSE:AMT) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there were a few fund managers who were dropping their full holdings by the end of the third quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, valued at about $48.3 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund cut about $21.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to American Tower Corporation (REIT) (NYSE:AMT). We will take a look at 3M Company (NYSE:MMM), QUALCOMM, Incorporated (NASDAQ:QCOM), United Parcel Service, Inc. (NYSE:UPS), and Rio Tinto Group (NYSE:RIO). This group of stocks’ market caps resemble AMT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MMM 46 855763 -6
QCOM 67 3090818 7
UPS 42 975024 -3
RIO 21 1680869 -1
Average 44 1650619 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $1651 million. That figure was $3658 million in AMT’s case. QUALCOMM, Incorporated (NASDAQ:QCOM) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 21 bullish hedge fund positions. American Tower Corporation (REIT) (NYSE:AMT) is not the most popular stock in this group but hedge fund interest is still above average. 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 1.0% in 2020 through May 1st but still beat the market by 12.9 percentage points. Hedge funds were also right about betting on AMT as the stock returned 2.3% in 2020 (through May 1st) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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