TIP826: American Tower (AMT): The Wide Moat Business Your Phone Can't Live Without w/ Kyle Grieve & Shawn O'Malley

**SPEAKER_1** (0:00)
You're listening to TIP.

**Shawn O'Malley** (0:03)
I'm not exactly a huge REIT guy, but when I discovered that Chuck Ackray had this massive position in American Tower, I mean, it piqued my interest, right? And when I found out how much of a multi-bagger it had been for him at 280x, I mean, come on, that's just ridiculous.

**Kyle Grieve** (0:18)
Yeah, you know, it's always been a business that I think I really found fascinating specifically because of that Chuck Ackray angle. Then, you know, the more I dug into the business, the more I saw that the business is still really good, but it's currently in a nearly 40% drawdown, which really excited the value investor in me.

**Shawn O'Malley** (0:32)
Oh my gosh, and that drawdown has been going out since 2021 What is driving that?

**Kyle Grieve** (0:37)
Yeah, it's been a while. I think the business is still quite good. They got some really, really good assets. They have some really good switching costs. But, you know, over the years, unfortunately, from what I saw, the balance sheet has just gotten a lot uglier.

**Shawn O'Malley** (0:48)
Well, so I didn't even know AMT was a REIT until you told me. But, you know, historically, REITs are not known for having the cleanest balance sheets.
Right.

**Kyle Grieve** (0:57)
And I believe this is the first REIT that we've even ever covered on the show. So I think it's going to be a really, really fun business to discuss.

**Shawn O'Malley** (1:02)
All right. Well, if you're ready, let's do it.

**SPEAKER_1** (1:08)
Since 2014, with more than 200 million downloads, we have interviewed the world's best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you.
This show is not investment advice. It's intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now for your hosts, Shawn O'Malley and Kyle Grieve.

**Shawn O'Malley** (1:54)
Hey folks, we have covered a handful of businesses with wide moats and high barrier sentry. Transdime comes to mind as a business that owns several proprietary aerospace components for which customers have very, very few, if any, substitutes. And this creates a unique situation where switching becomes nearly impossible. And so today, we're going to discuss American Tower, which is another business with a moat that is really about a mile wide, to put it honestly. And so this business is fascinating too, because it's been a massive winner in the past. And I know Kyle, that one of your favorite investors, Chuck Ackery, has taken part in a lot of the upside that American Tower has seen.

**Kyle Grieve** (2:36)
Yes. Chuck Ackery is one of my investing icons and has held AMT well past 100-bagger status. So he actually still holds it in Ackery Capital Management, but he's been selling large amounts of it over the past few years. And now it's only a 0.14% portfolio holding.
But it's been a major position for his fund throughout its history. It was a top four position in the portfolio for many years up until around 2020 when it looked like he really ramped up the selling.
But I've always really admired Chuck's ability to just hold these incredible compounders for decades. He took part in American Tower's IPO all the way back in 1998 at a price of about 80 cents. Now what might be even more impressive than identifying a winner at the IPO stage, is just what Chuck had to go through to realize those 100-bagger plus returns. So from the depth of the tech bubble to 9-11 and several other market crashes, he was able to build meaningful wealth by just maintaining a very large position in American Tower. So we'll get into some of the reasons why he might have decided to trim the position later. But I think it's a great case study of just how powerful it is to really find a business with these compounding characteristics, a multi-decade runway, and one that's run by a very, very talented capital allocator. And this is, I think, how Chuck made 28,000% returns on this one pick.

**Shawn O'Malley** (3:47)
When you put it in percentage terms, it just feels ridiculous.
The results are incredible. I feel like I have this special connection with Chuck Ockray because his firm is based not all that far away from me here in Virginia. And I think that's pretty cool, right? It feels like New York gets all the attention with Wall Street or Omaha with Buffett and Berkshire. But here for me, we have a local icon. So that's really fun to see. And I would classify his style as having a relentless focus on quality, looking for businesses that are incredibly impervious to competitive threats. And so I enjoy a good high quality name as much as anyone. So I'm super excited to get into American Tower today. And it's a bit of a weird business that again, is technically designated as a REIT, which stands for Real Estate Investment Trust. And so the question is going to be like with any quality business, firstly, do we agree with the premise that this is an exceptional business? And then secondly, and just as importantly, can we get shares in the company at a price that's reasonable?