Steel City Capital recently released its Q4 2020 Investor Letter, a copy of which you can download here. In 2020, the fund returned 10% net of fees, while the S&P 500 Index was up 16.3%. You should check out Steel City Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, Steel City Capital highlighted a few stocks and Anterix Inc. (NASDAQ:ATEX) is one of them. Anterix Inc. (NASDAQ:ATEX) provides wireless communications applications. In the last three months, Anterix Inc. (NASDAQ:ATEX) stock gained 19.7% and on January 20th it had a closing price of $40.27. Here is what Steel City Capital said:
"Anterix (Long): Anterix is the largest holder of “low band” 900 MHz spectrum in the United States. The company is currently repackaging its spectrum holdings in order to offer private broadband networks to the nation’s leading investor-owned utilities. Christmas came early when, on December 21st, ATEX announced it had inked its first longterm spectrum lease agreement with the utility Ameren. The agreement includes an initial 30-year lease term with a single 10-year extension option (for an additional payment) allowing for exclusive use of 6 MHz of broadband spectrum. The base contract period calls for a $48 million payment, with approximately half pre-paid by June 2021 and the balance being paid no later than 2026. ATEX’s shares rallied 50% on the day of the announcement.
The terms imply a spectrum valuation of ~$0.80/MHz-Pop4 which is important in several contexts. First, this represents a 33% premium to the average price of ~$0.60/MHz-Pop paid for 600 MHz spectrum in the counties covered by Ameren’s service territory. ATEX’s management has long promoted the idea they should be able to capture some sort of premium to 600 MHz pricing, and at least in this first contract, that assertion proved true. Nationwide, the 600 MHz auction priced at $0.93/MHz-Pop, implying a positive read through for the whole of ATEX’s spectrum holdings, assuming this type of premium holds. Second, in the weeks leading up to the announcement, ATEX’s share price implied a spectrum value around $0.30/MHz-Pop, well below the contract’s indicative price. The announcement highlighted the price-to-intrinsic value disconnect that underpins the Partnership’s investment thesis.
After the initial spike, ATEX’s shares have unfortunately given back much of their gain. It’s hard to know who has been selling and why, but my outlook is unchanged. Management reiterated their expectation for 2-3 signed contracts by the end of their fiscal year in March. I put an elevated degree of confidence in this outlook considering their more recent messaging shortcomings, of which they are keenly aware. Coupled with ongoing spectrum purchases in key markets, I fully expect the company to make good on its commitment which will bode well for our position."
In Q3 2020, the number of bullish hedge fund positions on Anterix Inc. (NASDAQ:ATEX) stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that Anterix Inc. (NASDAQ:ATEX) isn't ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website:
Disclosure: None. This article is originally published at Insider Monkey.