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Is American Tower Corporation (REIT) (AMT) A Good Stock To Buy?

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At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not American Tower Corporation (REIT) (NYSE:AMT) makes for a good investment right now.

Is AMT a good stock to buy? American Tower Corporation (REIT) (NYSE:AMT) investors should be aware of a decrease in hedge fund interest in recent months. American Tower Corporation (REIT) (NYSE:AMT) was in 58 hedge funds' portfolios at the end of March. The all time high for this statistic is 62. There were 61 hedge funds in our database with AMT positions at the end of the fourth quarter. Our calculations also showed that AMT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

William Von Mueffling - Cantillon Capital Management
William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we're going to take a peek at the fresh hedge fund action regarding American Tower Corporation (REIT) (NYSE:AMT).

Do Hedge Funds Think AMT Is A Good Stock To Buy Now?

At first quarter's end, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. By comparison, 57 hedge funds held shares or bullish call options in AMT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Akre Capital Management held the most valuable stake in American Tower Corporation (REIT) (NYSE:AMT), which was worth $1703.1 million at the end of the fourth quarter. On the second spot was Cantillon Capital Management which amassed $475.6 million worth of shares. Fisher Asset Management, D E Shaw, and Alkeon Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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 11.56% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, earmarking 9.92 percent of its 13F equity portfolio to AMT.

Judging by the fact that American Tower Corporation (REIT) (NYSE:AMT) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of money managers who were dropping their full holdings in the first quarter. Interestingly, Renaissance Technologies dropped the largest stake of the 750 funds tracked by Insider Monkey, comprising close to $176.8 million in stock, and Stuart J. Zimmer's Zimmer Partners was right behind this move, as the fund cut about $139.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds in the first quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as American Tower Corporation (REIT) (NYSE:AMT) but similarly valued. These stocks are The Estee Lauder Companies Inc (NYSE:EL), Intuit Inc. (NASDAQ:INTU), Lockheed Martin Corporation (NYSE:LMT), Square, Inc. (NYSE:SQ), Uber Technologies, Inc. (NYSE:UBER), Target Corporation (NYSE:TGT), and Micron Technology, Inc. (NASDAQ:MU). This group of stocks' market values are closest to AMT's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EL,59,4103128,8 INTU,68,4707761,0 LMT,50,2295448,-3 SQ,92,9202246,3 UBER,130,10532866,-5 TGT,60,4760942,-18 MU,100,7621579,0 Average,79.9,6174853,-2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 79.9 hedge funds with bullish positions and the average amount invested in these stocks was $6175 million. That figure was $4594 million in AMT's case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand Lockheed Martin Corporation (NYSE:LMT) is the least popular one with only 50 bullish hedge fund positions. American Tower Corporation (REIT) (NYSE:AMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMT is 35.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on AMT as the stock returned 12.8% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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