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Crown Castle International Corp. (CCI): Hedge Funds In Wait-and-See Mode

Reymerlyn Martin

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Crown Castle International Corp. (NYSE:CCI). There are 3 ETFs with 7+% weights in CCI right now: Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE:SRVR), The Real Estate Select Sector SPDR Fund (NYSE:XLRE), and Invesco DWA Financial Momentum ETF (NASDAQ:PFI).

Is Crown Castle International Corp. (NYSE:CCI) a great investment right now? The smart money is becoming hopeful. The number of long hedge fund bets improved by 1 recently. Our calculations also showed that CCI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the eyes of most traders, hedge funds are viewed as worthless, old financial vehicles of years past. While there are over 8000 funds in operation at present, Our researchers look at the upper echelon of this group, around 750 funds. It is estimated that this group of investors shepherd the majority of the smart money's total asset base, and by tracking their matchless stock picks, Insider Monkey has uncovered several investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_340081" align="aligncenter" width="600"] Phill Gross of Adage Capital Management[/caption]

Phill Gross of Adage Capital Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the new hedge fund action surrounding Crown Castle International Corp. (NYSE:CCI).

What does smart money think about Crown Castle International Corp. (NYSE:CCI)?

Heading into the fourth quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in CCI over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CCI_dec2019

More specifically, Bill & Melinda Gates Foundation Trust was the largest shareholder of Crown Castle International Corp. (NYSE:CCI), with a stake worth $741.3 million reported as of the end of September. Trailing Bill & Melinda Gates Foundation Trust was Renaissance Technologies, which amassed a stake valued at $372 million. Echo Street Capital Management, AQR Capital Management, and Adage 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 Skylands Capital allocated the biggest weight to Crown Castle International Corp. (NYSE:CCI), around 8% of its portfolio. Bill & Melinda Gates Foundation Trust is also relatively very bullish on the stock, earmarking 3.49 percent of its 13F equity portfolio to CCI.

As industrywide interest jumped, specific money managers have jumped into Crown Castle International Corp. (NYSE:CCI) headfirst. D E Shaw, managed by David E. Shaw, established the biggest position in Crown Castle International Corp. (NYSE:CCI). D E Shaw had $22.8 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also made a $6 million investment in the stock during the quarter. The other funds with brand new CCI positions are Mark Coe's Intrinsic Edge Capital, Parvinder Thiara's Athanor Capital, and Matthew Hulsizer's PEAK6 Capital Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Crown Castle International Corp. (NYSE:CCI) but similarly valued. We will take a look at CIGNA Corporation (NYSE:CI), Ecolab Inc. (NYSE:ECL), Boston Scientific Corporation (NYSE:BSX), and Eni SpA (NYSE:E). This group of stocks' market values resemble CCI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CI,62,3080624,14 ECL,38,2169031,11 BSX,48,2372367,-2 E,5,58328,0 Average,38.25,1920088,5.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.25 hedge funds with bullish positions and the average amount invested in these stocks was $1920 million. That figure was $1850 million in CCI's case. CIGNA Corporation (NYSE:CI) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 5 bullish hedge fund positions. Crown Castle International Corp. (NYSE:CCI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CCI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CCI investors were disappointed as the stock returned -3.8% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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