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

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 American Tower Corporation (NYSE:AMT) and determine whether the smart money was really smart about this stock.

Is American Tower Corporation (NYSE:AMT) worth your attention right now? Investors who are in the know were taking an optimistic view. The number of bullish hedge fund positions rose by 11 lately. Our calculations also showed that AMT 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). AMT was in 57 hedge funds’ portfolios at the end of March. There were 46 hedge funds in our database with AMT holdings at the end of the previous quarter.

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

To the average investor there are numerous metrics market participants use to size up publicly traded companies. A couple of the best metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the S&P 500 by a healthy amount (see the details here).

Och-Ziff Capital Management

Daniel Och, Founder of OZ Management

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

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

At the end of the first quarter, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AMT over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Is AMT A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Akre Capital Management, managed by Charles Akre, holds the largest position in American Tower Corporation (NYSE:AMT). Akre Capital Management has a $1.5333 billion position in the stock, comprising 14.9% of its 13F portfolio. The second most bullish fund manager is Cantillon Capital Management, managed by William von Mueffling, which holds a $452.8 million position; the fund has 5% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass  Renaissance Technologies, Panayotis Takis Sparaggis’s Alkeon Capital Management and Stuart J. Zimmer’s Zimmer Partners. In terms of the portfolio weights assigned to each position Akre Capital Management allocated the biggest weight to American Tower Corporation (NYSE:AMT), around 14.9% of its 13F portfolio. Claar Advisors is also relatively very bullish on the stock, designating 8.83 percent of its 13F equity portfolio to AMT.

As aggregate interest increased, key hedge funds have jumped into American Tower Corporation (NYSE:AMT) headfirst. Point72 Asset Management, managed by Steve Cohen, established the most valuable position in American Tower Corporation (NYSE:AMT). Point72 Asset Management had $20.1 million invested in the company at the end of the quarter. Stephen J. Errico’s Locust Wood Capital Advisers also made a $13.3 million investment in the stock during the quarter. The following funds were also among the new AMT investors: Josh Donfeld and David Rogers’s Castle Hook Partners, Donald Sussman’s Paloma Partners, and Joseph Samuels’s Islet Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as American Tower Corporation (NYSE:AMT) but similarly valued. We will take a look at TOTAL S.A. (NYSE:TOT), Lockheed Martin Corporation (NYSE:LMT), GlaxoSmithKline plc (NYSE:GSK), and Broadcom Inc (NASDAQ:AVGO). This group of stocks’ market caps match AMT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TOT 12 836773 -5
LMT 55 1505572 8
GSK 27 1953128 1
AVGO 50 1720031 -11
Average 36 1503876 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1504 million. That figure was $3820 million in AMT’s case. Lockheed Martin Corporation (NYSE:LMT) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks American Tower Corporation (NYSE:AMT) is more popular among hedge funds. 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 still beat the market by 15.5 percentage points. Unfortunately AMT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AMT were disappointed as the stock returned 19.7% 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.