In this article we will take a look at whether hedge funds think Equifax Inc. (NYSE:EFX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Equifax Inc. (NYSE:EFX) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Equifax Inc. (NYSE:EFX) was in 43 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EFX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the key hedge fund action encompassing Equifax Inc. (NYSE:EFX).
Do Hedge Funds Think EFX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 42 hedge funds with a bullish position in EFX a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the most valuable position in Equifax Inc. (NYSE:EFX). Generation Investment Management has a $720.3 million position in the stock, comprising 3% of its 13F portfolio. On Generation Investment Management’s heels is Cantillon Capital Management, led by William von Mueffling, holding a $540 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Nicolai Tangen’s Ako Capital, Gabriel Plotkin’s Melvin Capital Management and Farallon Capital. In terms of the portfolio weights assigned to each position Ako Capital allocated the biggest weight to Equifax Inc. (NYSE:EFX), around 4.05% of its 13F portfolio. Cantillon Capital Management is also relatively very bullish on the stock, earmarking 3.68 percent of its 13F equity portfolio to EFX.
Consequently, some big names have jumped into Equifax Inc. (NYSE:EFX) headfirst. Melvin Capital Management, managed by Gabriel Plotkin, assembled the most outsized call position in Equifax Inc. (NYSE:EFX). Melvin Capital Management had $177.4 million invested in the company at the end of the quarter. Panayotis Takis Sparaggis’s Alkeon Capital Management also made a $121.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Doug Silverman and Alexander Klabin’s Senator Investment Group, Jinghua Yan’s TwinBeech Capital, and Louis Bacon’s Moore Global Investments.
Let’s also examine hedge fund activity in other stocks similar to Equifax Inc. (NYSE:EFX). We will take a look at McKesson Corporation (NYSE:MCK), Public Service Enterprise Group Incorporated (NYSE:PEG), Suncor Energy Inc. (NYSE:SU), Arthur J. Gallagher & Co. (NYSE:AJG), American Water Works Company, Inc. (NYSE:AWK), Nokia Corporation (NYSE:NOK), and Phillips 66 (NYSE:PSX). This group of stocks’ market caps are similar to EFX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCK | 51 | 2277126 | 0 |
| PEG | 26 | 518847 | 0 |
| SU | 32 | 1084858 | 0 |
| AJG | 32 | 1388489 | -8 |
| AWK | 28 | 1127944 | -2 |
| NOK | 22 | 388301 | -4 |
| PSX | 34 | 409385 | 8 |
| Average | 32.1 | 1027850 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1028 million. That figure was $3360 million in EFX’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand Nokia Corporation (NYSE:NOK) is the least popular one with only 22 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. Our overall hedge fund sentiment score for EFX is 76.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on EFX as the stock returned 10.1% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
