On Feb. 15, MSCI published its semi-annual review of the MSCI REIT index and chose not to include American Tower (AMT). This is a shame for AMT because much of their planning for future demand for their stock revolved around inclusion in the key REIT indices, and as of Wednesday, this plan has not panned out. There are many very valid reasons why MSCI could consider AMT not to be a REIT worthy of inclusion in the index. In my opinion the same reasons should be considered by investors as well. A full discussion of these reasons is available here.
This development is in keeping with my recent series of articles about AMT which can be accessed by following the links here. AMT's clients AT&T (T), Sprint (S) probably could not care less whether AMT is in an index or not, but this has been a focus of management for some time and today's result is not good.
Crown Castle (CCI) and SBA Communications (SBAC) are both in better positions to demonstrate their earnings potential than AMT who seems preoccupied with index inclusion to create demand for their shares.
I wrote the following letter to the CEO of AMT with some pertinent questions:
"An Open Letter to James Taiclet, CEO of American Tower REIT
February 15th, 2012
Dear Mr. Taiclet,
First off, I would like to disclose to you that I have a position in the securities of AMT, such that I will benefit from a decline in the price of your shares. Now that I have been transparent with you, I ask that you do the same.
I challenge you to do for yourself what you ask your investors to do: Do not sell shares of AMT. I do not think it is unreasonable for senior management and board directors to limit themselves to a selling window of one single month per year. I challenge you to not sell a share of AMT stock for a period of one year from today. I sold shares in AMT on the same day that you did, I will eventually have to pay for mine.
It would seem to me that your public statements are incongruous with your regular sales of the company stock. In my opinion, hiding behind the fig leaf of a 12-b-1 trading plan is an unacceptable answer. If AMT is truly "Completely De-risked in the US" and has "Turbocharged Growth", there truly is no need to diversify your personal portfolio.
Secondly, I ask that you provide the locations and purchase prices for all of the individual towers which AMT has purchased in the Indian states of Gujarat, Rajasthan and Maharashtra. The reason is so that I may travel to the sites and make an objective assessment of their location, tenancy and value.
Third, I ask that you direct those responsible to not engage in a public relations campaign against me or others who seek to highlight sensitive issues regarding AMT. I have noticed all links to primary data under your control have changed their URLs. While this may be a coincidence, I suspect not. I wish no harm to the company, only transparency which will allow the market to assess information accurately. In my opinion, if investors had full information about the risks of AMT they would pay less for the shares, which would benefit the value of my positions.
Fourth, I ask that you provide a clear accounting of precisely what are: "unrealized foreign currency losses resulting primarily from fluctuations in the foreign currency exchange rates associated with our intercompany notes and similar unaffiliated balances denominated in a currency other than the subsidiaries' functional currencies of approximately $145.1 million" which were incurred in Q3 of 2011.
Finally, of the 47 subsidiaries listed in your latest proxy , can you please clarify the net financial position of each with respect to obligations of the parent, American Tower REIT.
Thank you ,
Tim Dooling, CFA
I sincerely hope to get a response and am genuinely willing to travel to India to inspect AMT's towers there. In any event, stay tuned!
You can follow the correspondence here on Seeking Alpha, and can find links to the whole history on www.analyticfirepower.com
Additional disclosure: I have net negative delta options positions in AMT