Qualivian Investment Partners, 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 -1.4% was recorded by the fund for the third quarter of 2021, trailing the S&P 500 TR Index which had a 0.6% gain for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Qualivian Investment Partners, in its Q3 2021 investor letter, mentioned American Tower Corporation (REIT) (NYSE: AMT) and discussed its stance on the firm. American Tower Corporation is a Boston, Massachusetts-based real estate investment trust company with a $120.4 billion market capitalization. AMT delivered a 17.86% return since the beginning of the year, while its 12-month returns are up by 10.92%. The stock closed at $264.55 per share on October 12, 2021.
Here is what Qualivian Investment Partners has to say about American Tower Corporation in its Q3 2021 investor letter:
“What Attracts Us
Superior Business:
• High barriers to entry resulting from low bargaining power of suppliers (land owners) and customers (wireless companies). Neither can find reasonable substitutes for existing cell towers. Combined with low possibility of disruption, this results in a business oligopoly and pricing power.
• Stable business with consistent high returns on equity, low maintenance capital required, and strong cash generation.
− Ten-year, non-cancelable contracts with built in pricing escalators and high renewal rates
− 1%-2% churnSuperior Reinvestment Opportunities:
• Strong growth for the foreseeable future due to increasing demand for wireless data usage, resulting in wireless carriers Capex equipment spend on existing and new towers.
• Low maintenance capital expenditure requirements; most of capital expenditure is for growthSuperior Management / Capital Allocation:
• Capital reinvested back in business has had returns well above cost of capital
• Company has purchased stock opportunistically…” (Click here to see the full text)
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Based on our calculations, American Tower Corporation (REIT) (NYSE: AMT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. AMT was in 55 hedge fund portfolios at the end of the first half of 2021, compared to 58 funds in the previous quarter. American Tower Corporation (REIT) (NYSE: AMT) delivered a -5.98% 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.
