5. Crown Castle Inc. (NYSE:CCI)
Number of Hedge Fund Holders: 38
Crown Castle Inc. (NYSE:CCI) operates as a significant player in the communications infrastructure sector, owning and managing over 40,000 cell towers and approximately 90,000 route miles of fiber that support small cell and fiber solutions throughout major markets in the United States. The extensive portfolio includes around 115,000 small cell nodes that are either operational or under contract, establishing a comprehensive network that links urban areas and communities to critical data and wireless services.
About the company, Cramer said, “Crown Castle is just okay. It’s not that well run. It’s got a decent yield of 5.6%. I would not chase the stock. It just had a nice move up. I don’t want to be there.”
Since entering the fiber market in 2015, Crown Castle Inc. (NYSE:CCI) has expanded its fiber operations through various acquisitions. Despite this growth, the high expenses associated with constructing fiber infrastructure have negatively impacted financial performance, leading the company to reconsider its approach to the fiber business and implement cost-cutting measures.
In light of these challenges, the company has been evaluating potential options for its fiber assets, particularly after reaching an agreement with activist investor Elliott Investment Management, which aimed at altering the company’s board structure.
Speculation surrounding its fiber and small cell assets intensified when Reuters’ report emerged about potential bids from EQT-backed Zayo and TPG, suggesting a valuation in the range of $8 billion to $10 billion.
On October 2, Wells Fargo kept an Equal Weight rating and $100 price target on Crown Castle Inc. (NYSE:CCI). The firm mentioned that expectations in the market were leaning towards a valuation exceeding $10 billion.
The firm mentioned that the reported figures falling short of these expectations contributed to a decline in share prices. The firm was not surprised by the lower-than-expected valuation, given recent assessments showing relatively limited demand for the company’s portfolio.
Aristotle Capital Management, LLC stated the following regarding Crown Castle Inc. (NYSE:CCI) in its Q2 2024 investor letter:
“We first invested in Crown Castle Inc. (NYSE:CCI), a provider of telecommunications infrastructure (including towers, fiber and small cells), in 2021. During our holding period, tenancy ratios for the company’s tower business increased. However, the company’s fiber and small cell business segments have yet to deliver the expected benefits from the 5G network transition. Additionally, the CEO of Crown Castle stepped down at the end of 2023, influenced by Elliott Investment Management, an activist investor. Concurrently, the company has initiated a strategic and operational review of its fiber segment to determine whether to pursue a turnaround or a complete/partial sale. Given the uncertainty surrounding the company’s business strategy and new management team, we decided to exit the investment. We will continue to monitor the company from the sidelines.”
