By Philip van Doorn, MarketWatch
President Trump has made it clear he wants Congress to pass “a very major infrastructure bill of a trillion dollars,” or maybe more.
That has led to the question of which companies might benefit the most from government contracts. Then again, as we saw with the failure of the first major piece of legislation attempted by the Republican-controlled Congress, one can never expect a president to get his wishes, even if his party is in the majority.
Josh Duitz, manager of the Alpine Global Infrastructure Fund /zigman2/quotes/205459282/realtime AIAFX +0.63% , thinks legislation is “fairly likely, six to eight months out,” because of bipartisan support. In an April 21 interview, he said “the first go” might be for $200 billion in government spending, possibly “growing to $1 trillion over time.” But the positive effect for U.S. companies could take up to two years.
But “there is infrastructure spending going on in the world right now, and we want to benefit from that,” he said.
The fund has $147 million in assets. Alpine Funds is headquartered in Purchase, N.Y., and manages mutual funds and exchange traded funds with assets totaling about $4 billion.
He provided three examples of companies held by the fund that he believes are very well-positioned to benefit from global infrastructure spending, regardless of what happens in Washington:
Ferrovial SA /zigman2/quotes/207599485/delayed ES:FER +1.21% is headquartered in Madrid and is a part-owner of Heathrow Airport in London.
“Their best asset is their concession on 407 ETR,” an express toll road in Toronto, Duitz said. Ferrovial has a 99-year concession, signed in 1999, for 43% of the toll road’s revenue, through its Cintra subsidiary.
What Duitz loves about the concession is that “they get to raise tolls every year and on average they have been doing it by 7% to 8%,” annually. Many similar business arrangements allow for annual toll increases that only match the rate of inflation, he said.
Duitz mentioned two other toll-road deals for Ferrovial, a 50-year concession for a section of Interstate 66 in Virginia and concessions for a section of the LBJ Expressway and for the Tarrant Expressway in Texas.
“We also like the cellphone tower companies, both in and outside the U.S.,” Duitz said. He offered American Tower Corp. /zigman2/quotes/200890312/composite AMT -1.84% and Crown Castle International Corp. /zigman2/quotes/202885080/composite CCI -1.26% , which are domestic players held by the fund. However, he prefers Cellnex Telecom SA /zigman2/quotes/203057796/delayed ES:CLNX -1.52% , because the company’s shares “trade at a 20% discount to the U.S. operators on an EBITDA [earnings before interest, taxes, depreciation and amortization] basis.”