Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we publish an article with the title “Recession is Imminent: We Need A Travel Ban NOW”. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards American Tower Corporation (REIT) (NYSE:AMT).
Is American Tower Corporation (REIT) (NYSE:AMT) a safe investment right now? The smart money is in a pessimistic mood. The number of bullish hedge fund positions went down by 6 lately. 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 below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
William Von Mueffling of Cantillon Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind we’re going to check out the recent hedge fund action surrounding American Tower Corporation (REIT) (NYSE:AMT).
What does smart money think about American Tower Corporation (REIT) (NYSE:AMT)?
At the end of the fourth quarter, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. By comparison, 41 hedge funds held shares or bullish call options in AMT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in American Tower Corporation (REIT) (NYSE:AMT) was held by Akre Capital Management, which reported holding $1651.5 million worth of stock at the end of September. It was followed by Cantillon Capital Management with a $478.4 million position. Other investors bullish on the company included Zimmer Partners, Renaissance Technologies, and 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, setting aside 6.74 percent of its 13F equity portfolio to AMT.
Because American Tower Corporation (REIT) (NYSE:AMT) has experienced falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies who sold off their full holdings in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $48.3 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund dumped about $21.9 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 6 funds in the third quarter.
Let’s now take a look at 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 valuations are similar to AMT’s market valuation.
| 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th but still beat the market by 1.9 percentage points. Hedge funds were also right about betting on AMT as the stock returned 0.9% during the first quarter (through March 9th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
