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Did The Smart Money Play American Tower Corporation (AMT) Correctly?

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. Hedge funds' consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn't been kind to hedge funds. In this article we look at how hedge funds traded American Tower Corporation (NYSE:AMT) and determine whether the smart money was really smart about this stock.

American Tower Corporation (NYSE:AMT) was in 61 hedge funds' portfolios at the end of September. The all time high for this statistic is 62. AMT shareholders have witnessed an increase in enthusiasm from smart money recently. There were 55 hedge funds in our database with AMT holdings at the end of June. Our calculations also showed that AMT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Millennium Management, Catapult Capital Management
Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let's take a glance at the fresh hedge fund action regarding American Tower Corporation (NYSE:AMT).

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

At Q3's end, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AMT over the last 25 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Is AMT A Good Stock To Buy?
Is AMT A Good Stock To Buy?

More specifically, Akre Capital Management was the largest shareholder of American Tower Corporation (NYSE:AMT), with a stake worth $1859.9 million reported as of the end of September. Trailing Akre Capital Management was Fisher Asset Management, which amassed a stake valued at $523.9 million. Cantillon Capital Management, Alkeon Capital Management, and Citadel Investment Group 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 (NYSE:AMT), around 11.45% of its 13F portfolio. Manor Road Capital Partners is also relatively very bullish on the stock, dishing out 8.24 percent of its 13F equity portfolio to AMT.

Consequently, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in American Tower Corporation (NYSE:AMT). Balyasny Asset Management had $35.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $16 million position during the quarter. The other funds with new positions in the stock are Mark R. Freeman's Socorro Asset Management, Felix Wai's Zeno Research, and Matthew Tewksbury's Stevens Capital Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as American Tower Corporation (NYSE:AMT) but similarly valued. These stocks are Amgen, Inc. (NASDAQ:AMGN), Toronto-Dominion Bank (NYSE:TD), Intuitive Surgical, Inc. (NASDAQ:ISRG), Snap Inc. (NYSE:SNAP), Applied Materials, Inc. (NASDAQ:AMAT), Pinduoduo Inc. (NASDAQ:PDD), and General Electric Company (NYSE:GE). All of these stocks' market caps are closest to AMT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMGN,52,1448267,-1 TD,17,294336,0 ISRG,61,3536259,1 SNAP,78,6739225,14 AMAT,68,4320480,-5 PDD,49,3538156,0 GE,53,6244560,-14 Average,54,3731612,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $3732 million. That figure was $4475 million in AMT's case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 17 bullish hedge fund positions. American Tower Corporation (NYSE:AMT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMT is 75.6. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, AMT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AMT were disappointed as the stock returned -4.8% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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