Top Telecommunications Services Picks by Fund Gurus Concentrated in the Sector

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Includes: AMT, CCI, S, SBAC, VZ
by: GuruFundPicks

What do the top hedge fund and mutual fund gurus like in the Telecommunications Services group? This article, the forty-fourth in a series, identifies, through research of the latest available institutional 13-F filings, the gurus who are most invested in the Telecommunications Services group, and the specific stocks within that group that they prefer to hold in their portfolios.

Furthermore, please note that this article will be among the last in this series, as the latest March 2011 quarter 13-F Institutional filings are now almost complete. Later this week, I will bring to you the "Top New and Added Picks" of guru funds by industry/sector detailing this time not the top holdings, but more importantly what "New" positions they took and what existing positions they added to in the latest March 2011 quarter. Please check my article page for previous articles in this series.

A guru is defined as someone who is regarded as having great knowledge, wisdom and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as gurus, including long-term performance, low portfolio volatility and an elite reputation in the investment community.

Many of us are familiar with leading investors and hedge fund managers such as Warren Buffet, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called gurus.

The study of the investing habits of gurus can be informative as these are very savvy, well-respected investors with a high personal net worth deploying large sums of capital from their funds regularly. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.

The total capitalization of the U.S. equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading companies in the Internet group (as defined above) is $425 billion or just over 2.8% of the overall market. The Table lists the top six investment gurus whose funds have invested more than one-and-a-half times that average or 4.2% in the group. The following are their leading picks in that group:

  • American Tower Corp. CLA (NYSE:AMT) operates cellular tower used by wireless service providers and TV and radio broadcast companies.
  • Sprint Nextel Corp. (NYSE:S) provides digital wireless voice and data services to 49 million subscribers in the U.S., Puerto Rico and the Virgin Islands.
  • Crown Castle International Corp. (NYSE:CCI) operates wireless towers in the U.S., Australia, and Puerto Rico for wireless service providers.
  • SBA Communications Corp. (NASDAQ:SBAC) operates cellular towers in the U.S. and provides leasing services to wireless service providers.
  • Verizon Communications (NYSE:VZ) provides local exchange, network access, data, wireless and information services in the U.S. and over 150 countries.

Table

Fund and Guru

Type of Fund

Assets Under Management

Percent Equity Portfolio Invested in Telecommunications Services Group

Major Telecommunications Services Group Company Positions in Portfolio

Akre Capital Management, LLC (Chuck Akre)

mutual fund - Growth at a Reasonable Price

$ 477 million

13.0%

AMT

Chou Associates Management Inc. (Francis Chou)

mutual fund

$ 510 million

6.6%

S

Viking Global Investors LP (Andreas Halvorsen)

hedge fund

$ 12.1 billion

4.9%

AMT, CCI

Greenlight Capital Inc. (David Einhorn)

hedge fund - Shareholder Activist

$ 5 billion

4.5%

S

Blum Capital Partners (Richard Blum)

hedge fund - Deep Value

$ 1.7 billion

4.4%

SBAC

Hillman Capital Management, Inc. (Mark Hillman)

Asset Manager including mutual funds

$ 450 million

4.2%

VZ

Click to enlarge

Chuck Akre, Managing Member and CEO of Akre Capital Management LLC, has been named to Barron's "Top 100 mutual fund Managers" list from 2003-2006, one of only two small cap growth managers to make the list four consecutive years. He has been in the securities business since 1968, first as Director and CEO of Asset Management Division and Director of Research at Johnston, Lemon & Co. until 1989, and later as the sole sub-advisor to the $ 1 billion FBR Focus fund from which he resigned in 2009. While he was managing the FBR Focus fund, the fund performed in the top 1% of small/mid-cap growth funds in 2002, 2004, and 2006, as well as the 2nd percentile in 2001 and the 6th percentile in 2008. As of the latest filing, Akre Capital Management had $477 million holdings in equities and was relatively concentrated with less than 35 positions in the portfolio. His focus seems to be in the small- and mid-capitalization portion of the equities markets, and his investment style seems to be selecting equities based on a Growth at a Reasonable Price (GARP) approach.

Francis Chou is the fund manager for the Chou America mutual fund. The investment process followed in selecting equity investments for the funds is a value-oriented approach to investing. This involves a detailed analysis of the strengths of individual companies, with much less emphasis on short-term market factors. Far greater importance is placed upon an assessment of a company's balance sheet, cash flow characteristics, profitability, industry position, special strengths, future growth potential and management ability.

Greennwich, CT-based hedge fund, Viking Global Investors, was founded in 1999 by guru Andreas Halvorsen along with David Ott and Brian Olson. All three founders are Tiger Cubs, in that prior to founding the firm, they all worked at Julian Robertson’s Tiger Management LLC. The firm employs a fundamental analysis with a bottom-up stock picking approach to make its investments. The firm also employs a long-short strategy to select its securities.

New York-based hedge fund Greenlight Capital, headed by guru David Einhorn, was founded in 1996 with $900,000 of capital (half borrowed from Einhorn’s parents). It invests in publicly traded North American corporate debt offerings and equities. It also manages a fund of funds and a private equity fund through its affiliates, and it also operates a property/casualty insurer.

San Francisco-based hedge fund Blum Capital Management, headed by guru Richard Blum, was founded in 1975. It is an investment firm making strategic block, minority and control investments in public and private companies.

Bethesda, Maryland-based Hillman Capital Management, headed by guru Mark Hillman is a value manager, and invests in out-of-favor companies that have quantitative competitive advantages, and whose value is not yet factored into the market.

Credit: Historical fundamentals, including operating metrics and stock ownership information were derived using I-Metrix by Edgar Online, Zacks Investment Research, DailyGraphs, Thomson Reuters and Briefing.com. fund data, including assets under management and firm profiles are sourced mostly from hedgetracker.com. The information and data are believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not consider your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks, including loss of principal.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.