Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Equinix Inc (NASDAQ:EQIX) based on that data.
Equinix Inc (NASDAQ:EQIX) was in 43 hedge funds’ portfolios at the end of the fourth quarter of 2019. EQIX has seen an increase in hedge fund interest recently. There were 40 hedge funds in our database with EQIX holdings at the end of the previous quarter. Our calculations also showed that EQIX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind let’s take a look at the new hedge fund action surrounding Equinix Inc (NASDAQ:EQIX).
Hedge fund activity in Equinix Inc (NASDAQ:EQIX)
At the end of the fourth quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 42 hedge funds with a bullish position in EQIX a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Equinix Inc (NASDAQ:EQIX) was held by Farallon Capital, which reported holding $243 million worth of stock at the end of September. It was followed by Alkeon Capital Management with a $221.9 million position. Other investors bullish on the company included Citadel Investment Group, Rivulet Capital, and Echo Street Capital Management. In terms of the portfolio weights assigned to each position Portsea Asset Management allocated the biggest weight to Equinix Inc (NASDAQ:EQIX), around 25.57% of its 13F portfolio. Rivulet Capital is also relatively very bullish on the stock, setting aside 11.86 percent of its 13F equity portfolio to EQIX.
As one would reasonably expect, key money managers have jumped into Equinix Inc (NASDAQ:EQIX) headfirst. Holocene Advisors, managed by Brandon Haley, created the largest position in Equinix Inc (NASDAQ:EQIX). Holocene Advisors had $77.2 million invested in the company at the end of the quarter. Eduardo Abush’s Waterfront Capital Partners also initiated a $30.8 million position during the quarter. The following funds were also among the new EQIX investors: Dmitry Balyasny’s Balyasny Asset Management, Steve Cohen’s Point72 Asset Management, and Kevin Parker’s Sustainable Insight Capital Management.
Let’s check out hedge fund activity in other stocks similar to Equinix Inc (NASDAQ:EQIX). We will take a look at Honda Motor Co Ltd (NYSE:HMC), Prudential Public Limited Company (NYSE:PUK), Bank of Montreal (NYSE:BMO), and Marriott International Inc (NYSE:MAR). This group of stocks’ market values are closest to EQIX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HMC | 9 | 148249 | -2 |
| PUK | 6 | 47203 | -6 |
| BMO | 13 | 224601 | -2 |
| MAR | 37 | 2944131 | -8 |
| Average | 16.25 | 841046 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $841 million. That figure was $1639 million in EQIX’s case. Marriott International Inc (NYSE:MAR) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Equinix Inc (NASDAQ:EQIX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but still managed to beat the market by 3.1 percentage points. Hedge funds were also right about betting on EQIX as the stock returned 3% so far in Q1 (through March 11th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
