Is Equifax Inc. (EFX) Going to Burn These Hedge Funds?

Is Equifax Inc. (NYSE:EFX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Equifax Inc. (NYSE:EFX) has experienced an increase in support from the world’s most elite money managers lately. Equifax Inc. (NYSE:EFX) was in 37 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 42. There were 36 hedge funds in our database with EFX positions at the end of the fourth quarter. Our calculations also showed that EFX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are plenty of indicators market participants use to assess their holdings. Some of the less known indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

William Von Mueffling of Cantillon Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the recent hedge fund action encompassing Equifax Inc. (NYSE:EFX).

Do Hedge Funds Think EFX Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in EFX a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Generation Investment Management held the most valuable stake in Equifax Inc. (NYSE:EFX), which was worth $1246.1 million at the end of the fourth quarter. On the second spot was Cantillon Capital Management which amassed $398.8 million worth of shares. Echo Street Capital Management, Fundsmith LLP, and Farallon Capital 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 Fosse Capital Partners allocated the biggest weight to Equifax Inc. (NYSE:EFX), around 16.59% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, earmarking 5.22 percent of its 13F equity portfolio to EFX.

Consequently, specific money managers were leading the bulls’ herd. Ako Capital, managed by Nicolai Tangen, established the largest position in Equifax Inc. (NYSE:EFX). Ako Capital had $83.1 million invested in the company at the end of the quarter. Joe Milano’s Greenhouse Funds also initiated a $20.8 million position during the quarter. The other funds with brand new EFX positions are Matthew Hulsizer’s PEAK6 Capital Management, Thomas Lee’s Lee Capital Management, and Allon Hellmann’s Full18 Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Equifax Inc. (NYSE:EFX). We will take a look at Cerner Corporation (NASDAQ:CERN), POSCO (NYSE:PKX), Splunk Inc (NASDAQ:SPLK), Northern Trust Corporation (NASDAQ:NTRS), Royal Caribbean Group (NYSE:RCL), Hess Corporation (NYSE:HES), and Cloudflare, Inc. (NYSE:NET). All of these stocks’ market caps are closest to EFX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $645 million. That figure was $2475 million in EFX’s case. Cloudflare, Inc. (NYSE:NET) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 12 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 70.3. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on EFX as the stock returned 32.2% since the end of Q1 (through 6/25) 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.