Portfolio Manager Brian Massey of Mar Vista Investment Partners says his firm has been a long admirer of American Tower Corp’s (AMT) business model and management team, and that the stock has been a terrific compounder for investors.
“We often hold it up as the poster child of the kind of compounding machines we prize. A single tower generates attractive amounts of excess capital, and management has plenty of opportunities to reinvest that capital either in new builds or acquisitions at very high rates of return,” Massey says.
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Massey says American Tower has significant scale advantages and that incremental returns are almost 100% once a tower is built. He adds that secular growth drivers for tower infrastructure around the globe are powerful, as wireless demand is expected to grow 50% per year over the next five years.
“To give an example of the global opportunity, the U.S. has 1,500 subscribers per tower compared to almost 4,400 subscribers per tower in Brazil. The numbers are even more staggering in the other developing markets. We think there is a very long secular tailwind of densifying wireless networks that will allow American Tower to grow revenues organically 6% to 9%,” Massey says.
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