We recently published a list of 10 Best Stocks to Buy for the Long-Term According to Charles Akre. In this article, we are going to take a look at where American Tower Corporation (NYSE:AMT) stands against other best stocks to buy for the long-term according to Charles Akre.
“Above-average returns at below-average risk” is the mantra that defines Charles Akre, one of the most successful asset managers on Wall Street. As the founder of Akre Capital Management, he is a celebrated value-oriented investor. He is best known as a collector of great business, which he has invested in for many years to generate optimum value.
His dedication to long-term planning and systematic valuation has consistently yielded exceptional results. Akre’s investment portfolio has generated more than 300% returns over the past ten years.
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He has become one of the most successful investors focusing on an investment philosophy dubbed the “three-legged stool” approach. The investment approach advocates for examining business models’ rates of return and reinvestment opportunities before investing. Likewise, Akre advocates investing in companies with enduring competitive advantages, robust balance sheets, and long-term earnings growth prospects.
Unlike most investors focusing on market trends, Akre’s philosophy focuses on finding companies trading at fair value. By avoiding popular stocks, the value investor has succeeded in concentrating on cheap opportunities that most investors often overlook. He also adopts a strategic approach that goes beyond buying and holding stock for the long term.
Instead, Akre consistently evaluates the core business strengths and fundamental aspects of companies. His focus on “outstanding businesses” indicates that he has carefully considered factors like competitive advantage, growth potential, and top-notch management. Consequently, the best stocks to buy for the long term, according to Charles Akre, are companies well poised to navigate short-term market fluctuations. Similarly, they are companies that capitalize on long-term compounding effects.
In contrast to passive index investing, Akre’s approach necessitates active monitoring of a company’s performance to ensure that it maintains the standards of an exceptional business. Having a thorough understanding of the management team, business operations, and industry dynamics is also essential.
The value investor also advocates for diversification as one of the ways of spreading the risk and shrugging off market volatility. Therefore, Akre Capital Management’s portfolio is spread across technology, financial services and other sectors. While the overall market has been trending over the past year, resulting in overstretched valuations, Akre believes there is still value to unlock. Nevertheless, he expects the financial markets to remain volatile.
“…The US stock market and quite likely the markets of Western Europe can continue to be very volatile as they respond to good news and bad news, which will pop up on a regular basis. From my perspective, this is actually good news-that kind of volatility will increasingly give us opportunities periodically… Therefore, markets can go up even when economic activity has not picked up. But my expectation is a fair amount of volatility for some time,” said Charles Akre.
Our Methodology
To compile our selection of the best stocks to buy for the long-term, according to Charles Akre, we began by analyzing Akre Capital Management’s 13F portfolio and chose to highlight the stock holdings that have remained within the portfolio for at least 5 years. Next, we assessed the number of hedge fund investors associated with each stock as of the end of the third quarter of this year. Finally, the stocks were ranked in ascending order based on the value of Charles Akre’s stakes in the companies.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide angled view of a high-rise office building, the windows reflecting a nearby cityscape.
American Tower Corporation (NYSE:AMT)
Akre Capital Management’s First Major Purchase: 2012
Akre Capital Management’s stake value: $1.41 Billion
Number of Hedge fund holders as of Q3: 73
American Tower Corporation (NYSE:AMT) provides wireless communication infrastructure and manages over 224,000 communication sites. It also boasts of a highly interconnected footprint of U.S. data center facilities. It is one of Charles Akre’s top stock holdings despite underperforming the broader market, going by its 8% year-to-date drop.
Despite recent underperformance, American Tower Corporation (NYSE:AMT) is a solid long-term investment because of its strong role in the 5G rollout. Over 50% of its towers already support 5G, and this will keep driving demand for its services. As a key player in wireless infrastructure, the company benefits from the growing need for data and 5G network expansion. Its extensive infrastructure is essential for supporting wireless networks and meeting the rising demand for mobile data.
The company also stands to gain from the increasing demand for data services and data centers, especially with the rise of artificial intelligence. Its diverse portfolio, including data centers and both domestic and international towers, provides a strong foundation for long-term growth. By diversifying, American Tower has capitalized on global trends in data usage and wireless connectivity.
By 2029, analysts predict that mobile data usage will triple, requiring ongoing network infrastructure investment. Consequently, American Tower is positioned to profit from the rising demand for data services, which fits nicely with the core business model.
Here is what Mar Vista Strategic Growth Strategy stated the following regarding American Tower Corporation (NYSE:AMT) in its Q3 2024 investor letter:
“American Tower Corporation’s (NYSE:AMT) stock rebounded nearly 20% during the third quarter, helped by the tailwind of lower interest rates. The stock has now appreciated more than one-third since U.S. 10-Yr Treasury interest rates peaked in late April 2024. As a levered REIT, lower rates benefit AMT’s equity value through a lower cost of debt and a higher value for its long-duration cash flows. Fundamental expectations did not change materially during the quarter as the company modestly increased their growth expectations for the year. The long-term global opportunities for 5G deployment, edge-of-network computing, and datacenters, remain attractive and are not fully reflected in the current stock price, in our opinion.”
Overall, AMT ranks 4th on our list of best stocks to buy for the long-term according to Charles Akre. While we acknowledge the potential of AMT to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.