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Why Millicom International Cellular (TIGO) Stock is a Compelling Investment Case

Alex Smith
·3 mins read

Generation PMCA recently released its Q2 2020 Investor Letter, a copy of which you can download here. The fund is managed by co-founders Randall Abramson and Herb Abramson. The investment firm serves its clients through two distinct areas: Portfolio Management and Capital Advisory services. You should check out Generation PMCA's top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Generation PMCA highlighted a few stocks and Millicom Intl Cellular SA (NASDAQ:TIGO) is one of them. Millicom Intl Cellular SA (NASDAQ:TIGO) is an international telecommunications and media company. Year-to-date, Millicom Intl Cellular SA (NASDAQ:TIGO) stock lost 40.3% and on September 3rd it had a closing price of $28.81. Here is what Generation PMCA said:

"Millicom International Cellular, under its Tigo brand, is one of the largest telecom operators in Central and South America, with the leading or second largest market share in each of its nine operating countries. The region is characterized by rapid economic growth, an expanding middle class, and a young and growing population that is set to increasingly adopt 4G and high-speed broadband services. Millicom is now in the process of transitioning its customer base to more profitable 4G mobile and high-speed cable subscriptions, shifting recurring revenue from 60% of total revenue today to 75-80% over the next few years while simultaneously reducing churn rates. Higher network density and a larger mix of higher margin services should lead to increased profit margins, stronger free cash flow and a higher return on invested capital supported by lower capital intensity. Exponentially growing demand for data in an increasingly digitalizing region means that Millicom’s network is set for attractive long-term growth as customers migrate onto higher quality network services. The industry’s inherent barriers to entry and Millicom’s formidable scale-based competitive advantage should enable the company to capture long-term growth and gradually consolidate its markets. Despite competitive, regulatory, jurisdictional, and macroeconomic risks, our margin of safety appears significant with our sum-of-the-parts FMV of KR585 (Swedish Krona), including a minority stake in Jumia, the burgeoning ‘Amazon of Africa’."

Mobile-Tower
Mobile-Tower

In Q1 2020, the number of bullish hedge fund positions on Millicom Intl Cellular SA (NASDAQ:TIGO) stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that Millicom Intl Cellular SA (NASDAQ:TIGO) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 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. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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