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Were Hedge Funds Right About Buying Crown Castle International Corp. (REIT) (CCI)?

Asma UL Husna

Is Crown Castle International Corp. (REIT) (NYSE:CCI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Crown Castle International Corp. (REIT) (NYSE:CCI) was in 34 hedge funds' portfolios at the end of the fourth quarter of 2018. CCI investors should be aware of an increase in activity from the world's largest hedge funds lately. There were 32 hedge funds in our database with CCI positions at the end of the previous quarter. Our calculations also showed that CCI isn't among the 30 most popular stocks among hedge funds.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Steven Cohen

Let's check out the fresh hedge fund action regarding Crown Castle International Corp. (REIT) (NYSE:CCI).

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

At the end of the fourth quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in CCI a year ago. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

CCI_mar2019

More specifically, Renaissance Technologies was the largest shareholder of Crown Castle International Corp. (REIT) (NYSE:CCI), with a stake worth $649.9 million reported as of the end of September. Trailing Renaissance Technologies was Bill & Melinda Gates Foundation Trust, which amassed a stake valued at $579.3 million. Millennium Management, Point72 Asset Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, some big names were breaking ground themselves. OZ Management, managed by Daniel S. Och, assembled the biggest position in Crown Castle International Corp. (REIT) (NYSE:CCI). OZ Management had $49.9 million invested in the company at the end of the quarter. Ken Heebner's Capital Growth Management also initiated a $35.8 million position during the quarter. The following funds were also among the new CCI investors: Glenn Russell Dubin's Highbridge Capital Management, Israel Englander's Millennium Management, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Crown Castle International Corp. (REIT) (NYSE:CCI) but similarly valued. These stocks are Celgene Corporation (NASDAQ:CELG), Suncor Energy Inc. (NYSE:SU), Illumina, Inc. (NASDAQ:ILMN), and Telefonica S.A. (NYSE:TEF). This group of stocks' market values are closest to CCI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CELG,58,4057617,2 SU,30,1054553,-6 ILMN,44,1090583,-1 TEF,6,47943,1 Average,34.5,1562674,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $1563 million. That figure was $2074 million in CCI's case. Celgene Corporation (NASDAQ:CELG) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 6 bullish hedge fund positions. Crown Castle International Corp. (REIT) (NYSE:CCI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on CCI, though not to the same extent, as the stock returned 16% and outperformed the market as well.

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

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