Author: Pete Malone

Crown Castle International ($CCI.US) Q2 2018: Outpaced guidance and expectations

Crown Castle International Corp. (CCI) had another strong quarter, outpacing guidance and expectations for top and bottom line as well as FFO per share. CCI introduced slightly higher guidance for Q3 2018 and the remainder of the year. During the quarter, CCI paid out a dividend of $1.05 per share, a year over year increase of 11%. This is above the company’s goal of 7-8% dividend growth annually. Growth in the towers industry continues to be driven by consumer demand for data which leads to investment by mobile carriers. CCI’s investment in small cells and fiber are performing better than expected and should accelerate in the second half of the year.

Current Price: $111 TTM Return: 13.05%

Target Price: $125 Position Size: 2%

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QMNIX – Recent Underperformance, Long Term Thesis Intact

Good Afternoon,

Below I address the recent performance of Market Neutral and why we are comfortable holding this fund long term.

We still believe that owning market neutral is a strong investment over the long term. The main pillars of our thesis remain intact.

1.) Diversification Benefits: The fund’s return correlations to traditional asset classes should be very low, targeting a beta of zero over time.

2.) Alternative to Fixed Income: Based on its risk parameters and expected return profile, QMNIX should provide an alternative to core bonds.

3.) Opportunity for positive risk adjusted returns: The fund seeks long term Sharpe Ratio of approximately 0.7 – 1.0.

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TORIX – Q1 2018 Commentary

TORIX – Q1 2018 Commentary

During the quarter, Tortoise MLP & Pipeline Fund underperformed its benchmark. The MLP and broad energy sectors sold off during the quarter due to negative sentiment as well as uncertainty following a FERC ruling. The team remains optimistic about the space believing that commodity prices will remain stable and that companies are better positioned to self-fund capital projects. As of the end of last month, the TTM yield of TORIX is 3.09%.

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BEXIX – Q1 2018 Commentary

BEXIX – Q1 2018 Commentary

The Baron Emerging Markets Fund underperformed relative to its benchmark during the first quarter. This relative performance was driven by poor stock selection, particularly in India. The team believes it is positioned for a rise in market volatility and would look to capitalize on opportunities that tend to arise in such environments.

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Sprint/T-Mobile Merger – Mixed Implications for CCI

Over the weekend, T-Mobile and Sprint officially announced a merger where T-Mobile would purchase Sprint for $26 billion in an all-equity deal. The deal still must be approved by the DOJ, and broadly analysts believe the odds of this exact deal being passed are about 50/50.

Because there is little certainty around that outcome, we will assume that the merger is going to take place. As I mentioned Friday, the major issue for CCI and other tower companies is the decommissioning of sites where Sprint and T-Mobile have shared or integrated networks.

While the headline risk centers on decommissioning of towers, there are several potential positive catalysts driven by the goal of improving 5G capabilities.

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