Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th. What do these smart investors think about Equifax Inc. (NYSE:EFX)?
Equifax Inc. (NYSE:EFX) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 35 hedge funds’ portfolios at the end of the third quarter of 2018. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Maxim Integrated Products Inc. (NASDAQ:MXIM), and Host Hotels and Resorts Inc (NYSE:HST) to gather more data points.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a peek at the latest hedge fund action surrounding Equifax Inc. (NYSE:EFX).
How have hedgies been trading Equifax Inc. (NYSE:EFX)?
Heading into the fourth quarter of 2018, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, no change from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in EFX at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cantillon Capital Management was the largest shareholder of Equifax Inc. (NYSE:EFX), with a stake worth $314.1 million reported as of the end of September. Trailing Cantillon Capital Management was Cantillon Capital Management, which amassed a stake valued at $314.1 million. Senator Investment Group, Citadel Investment Group, and Eminence Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Since Equifax Inc. (NYSE:EFX) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies who sold off their full holdings last quarter. Intriguingly, Matthew Sidman’s Three Bays Capital sold off the biggest stake of the 700 funds watched by Insider Monkey, worth an estimated $142.6 million in call options, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund sold off about $52.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Equifax Inc. (NYSE:EFX) but similarly valued. We will take a look at Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Maxim Integrated Products Inc. (NASDAQ:MXIM), Host Hotels and Resorts Inc (NYSE:HST), and First Republic Bank (NYSE:FRC). All of these stocks’ market caps resemble EFX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTWO | 58 | 2336400 | 2 |
| MXIM | 30 | 579428 | 5 |
| HST | 21 | 383143 | 0 |
| FRC | 23 | 724485 | 6 |
| Average | 33 | 1005864 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1.01 billion. That figure was $2.08 billion in EFX’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Host Hotels and Resorts Inc (NYSE:HST) is the least popular one with only 21 bullish hedge fund positions. Equifax Inc. (NYSE:EFX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TTWO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
