In this article we will check out the progression of hedge fund sentiment towards Crown Castle International Corp. (REIT) (NYSE:CCI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Crown Castle International Corp. (REIT) (NYSE:CCI) has seen an increase in enthusiasm from smart money recently. Our calculations also showed that CCI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_26397" align="aligncenter" width="399"] Ray Dalio of Bridgewater Associates[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the fresh hedge fund action encompassing Crown Castle International Corp. (REIT) (NYSE:CCI).
Hedge fund activity in Crown Castle International Corp. (REIT) (NYSE:CCI)
At Q1's end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CCI over the last 18 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Bill & Melinda Gates Foundation Trust was the largest shareholder of Crown Castle International Corp. (REIT) (NYSE:CCI), with a stake worth $770.1 million reported as of the end of September. Trailing Bill & Melinda Gates Foundation Trust was Renaissance Technologies, which amassed a stake valued at $246.7 million. D E Shaw, Echo Street Capital Management, and AQR 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. (REIT) (NYSE:CCI), around 11.76% of its 13F portfolio. Weiss Asset Management is also relatively very bullish on the stock, setting aside 6.66 percent of its 13F equity portfolio to CCI.
Now, specific money managers were leading the bulls' herd. Weiss Asset Management, managed by Andrew Weiss, assembled the largest position in Crown Castle International Corp. (REIT) (NYSE:CCI). Weiss Asset Management had $41.9 million invested in the company at the end of the quarter. John M. Angelo and Michael L. Gordon's Angelo Gordon & Co also initiated a $4.5 million position during the quarter. The following funds were also among the new CCI investors: John Overdeck and David Siegel's Two Sigma Advisors, Ray Dalio's Bridgewater Associates, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's also examine hedge fund activity in other stocks similar to Crown Castle International Corp. (REIT) (NYSE:CCI). We will take a look at Intuit Inc. (NASDAQ:INTU), S&P Global Inc. (NYSE:SPGI), Prologis Inc (NYSE:PLD), and Duke Energy Corporation (NYSE:DUK). All of these stocks' market caps resemble CCI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INTU,54,1557455,0 SPGI,73,2586131,-3 PLD,40,450612,5 DUK,35,1573551,-2 Average,50.5,1541937,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 50.5 hedge funds with bullish positions and the average amount invested in these stocks was $1542 million. That figure was $1641 million in CCI's case. S&P Global Inc. (NYSE:SPGI) is the most popular stock in this table. On the other hand Duke Energy Corporation (NYSE:DUK) is the least popular one with only 35 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on CCI, though not to the same extent, as the stock returned 19.2% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.