We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Equinix Inc (NASDAQ:EQIX) based on that data.
Equinix Inc (NASDAQ:EQIX) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. EQIX was in 55 hedge funds’ portfolios at the end of the first quarter of 2020. There were 43 hedge funds in our database with EQIX positions 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 Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 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 S&P 500 ETFs by 44 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 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.
Ken Griffin of Citadel Investment Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the latest hedge fund action regarding Equinix Inc (NASDAQ:EQIX).
Hedge fund activity in Equinix Inc (NASDAQ:EQIX)
Heading into the second quarter of 2020, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 28% from one quarter earlier. On the other hand, there were a total of 38 hedge funds with a bullish position in EQIX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Alkeon Capital Management held the most valuable stake in Equinix Inc (NASDAQ:EQIX), which was worth $237.4 million at the end of the third quarter. On the second spot was GQG Partners which amassed $222.1 million worth of shares. Citadel Investment Group, Farallon Capital, and Zimmer Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Caldera Capital allocated the biggest weight to Equinix Inc (NASDAQ:EQIX), around 17.73% of its 13F portfolio. SkyTop Capital Management is also relatively very bullish on the stock, earmarking 10.4 percent of its 13F equity portfolio to EQIX.
As aggregate interest increased, specific money managers have been driving this bullishness. GQG Partners, managed by Rajiv Jain, established the most outsized position in Equinix Inc (NASDAQ:EQIX). GQG Partners had $222.1 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also initiated a $50.2 million position during the quarter. The other funds with brand new EQIX positions are Josh Donfeld and David Rogers’s Castle Hook Partners, James Woodson Davis’s Woodson Capital Management, and Mark Coe’s Intrinsic Edge Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Equinix Inc (NASDAQ:EQIX) but similarly valued. We will take a look at Advanced Micro Devices, Inc. (NASDAQ:AMD), The Goldman Sachs Group, Inc. (NYSE:GS), U.S. Bancorp (NYSE:USB), and Morgan Stanley (NYSE:MS). This group of stocks’ market caps resemble EQIX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMD | 62 | 2087092 | 9 |
| GS | 74 | 3084948 | -1 |
| USB | 51 | 5625919 | 1 |
| MS | 70 | 3116102 | 10 |
| Average | 64.25 | 3478515 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 64.25 hedge funds with bullish positions and the average amount invested in these stocks was $3479 million. That figure was $1950 million in EQIX’s case. The Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand U.S. Bancorp (NYSE:USB) is the least popular one with only 51 bullish hedge fund positions. Equinix Inc (NASDAQ:EQIX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately EQIX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); EQIX investors were disappointed as the stock returned 7.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
