Were Hedge Funds Right About Crown Castle International Corp. (REIT) (CCI) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Crown Castle International Corp. (REIT)(NYSE:CCI) and determine whether the smart money was really smart about this stock.

Crown Castle International Corp. (REIT) (NYSE:CCI) was in 40 hedge funds’ portfolios at the end of the first quarter of 2020. CCI has seen an increase in support from the world’s most elite money managers lately. There were 38 hedge funds in our database with CCI holdings at the end of the previous quarter. Our calculations also showed that CCI isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

According to most investors, hedge funds are perceived as worthless, old investment tools of the past. While there are greater than 8000 funds with their doors open today, We hone in on the moguls of this group, approximately 850 funds. It is estimated that this group of investors direct most of the hedge fund industry’s total capital, and by following their finest investments, Insider Monkey has formulated several investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Ray Dalio of Bridgewater Associates

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. 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 gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the key hedge fund action surrounding Crown Castle International Corp. (REIT) (NYSE:CCI).

Hedge fund activity in Crown Castle International Corp. (REIT) (NYSE:CCI)

At Q1’s end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the fourth quarter of 2019. On the other hand, there were a total of 35 hedge funds with a bullish position in CCI a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Crown Castle International Corp. (REIT) (NYSE:CCI) was held by Bill & Melinda Gates Foundation Trust, which reported holding $770.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $246.7 million position. Other investors bullish on the company included D E Shaw, Echo Street Capital Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Skylands Capital allocated the biggest weight to Crown Castle International Corp. (REIT) (NYSE:CCI), around 11.76% of its 13F portfolio. Weiss Asset Management is also relatively very bullish on the stock, earmarking 6.66 percent of its 13F equity portfolio to CCI.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Weiss Asset Management, managed by Andrew Weiss, created the most valuable position in Crown Castle International Corp. (REIT) (NYSE:CCI). Weiss Asset Management had $41.9 million invested in the company at the end of the quarter. John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co also made a $4.5 million investment in the stock during the quarter. The other funds with brand new CCI positions are John Overdeck and David Siegel’s Two Sigma Advisors, Ray Dalio’s Bridgewater Associates, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Crown Castle International Corp. (REIT) (NYSE:CCI). These stocks are Intuit Inc. (NASDAQ:INTU), S&P Global Inc. (NYSE:SPGI), Prologis Inc (NYSE:PLD), and Duke Energy Corporation (NYSE:DUK). This group of stocks’ market values are similar to CCI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INTU 54 1557455 0
SPGI 73 2586131 -3
PLD 40 450612 5
DUK 35 1573551 -2
Average 50.5 1541937 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 50.5 hedge funds with bullish positions and the average amount invested in these stocks was $1542 million. That figure was $1641 million in CCI’s case. S&P Global Inc. (NYSE:SPGI) is the most popular stock in this table. On the other hand Duke Energy Corporation (NYSE:DUK) is the least popular one with only 35 bullish hedge fund positions. Crown Castle International Corp. (REIT) (NYSE:CCI) is not the least popular stock in this group but hedge fund interest is still below average. 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately CCI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CCI investors were disappointed as the stock returned 16.7% during the second quarter 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.