Is Equinix, Inc. (REIT) (EQIX) A Good Stock To Buy?

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Equinix, Inc. (REIT) (NASDAQ:EQIX).

Is EQIX a good stock to buy? Equinix, Inc. (REIT) (NASDAQ:EQIX) investors should pay attention to a decrease in hedge fund interest recently. Equinix, Inc. (REIT) (NASDAQ:EQIX) was in 41 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 55. Our calculations also showed that EQIX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Stuart Zimmer of Zimmer Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. Keeping this in mind let’s take a look at the recent hedge fund action surrounding Equinix, Inc. (REIT) (NASDAQ:EQIX).

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

Heading into the second quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EQIX over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Impax Asset Management held the most valuable stake in Equinix, Inc. (REIT) (NASDAQ:EQIX), which was worth $414.4 million at the end of the fourth quarter. On the second spot was Alkeon Capital Management which amassed $327.4 million worth of shares. Rokos Capital Management, Zimmer Partners, and GLG 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 Tensile Capital allocated the biggest weight to Equinix, Inc. (REIT) (NASDAQ:EQIX), around 6.25% of its 13F portfolio. Zeno Research is also relatively very bullish on the stock, dishing out 4.85 percent of its 13F equity portfolio to EQIX.

Due to the fact that Equinix, Inc. (REIT) (NASDAQ:EQIX) has experienced falling interest from the smart money, logic holds that there is a sect of fund managers who were dropping their positions entirely by the end of the first quarter. Interestingly, Rajiv Jain’s GQG Partners said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, comprising about $490.5 million in stock. Greg Poole’s fund, Echo Street Capital Management, also dumped its stock, about $46.6 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks similar to Equinix, Inc. (REIT) (NASDAQ:EQIX). These stocks are Workday Inc (NASDAQ:WDAY), Global Payments Inc (NYSE:GPN), Banco Santander, S.A. (NYSE:SAN), Capital One Financial Corp. (NYSE:COF), Twilio Inc. (NYSE:TWLO), Takeda Pharmaceutical Company Limited (NYSE:TAK), and Bank of Montreal (NYSE:BMO). This group of stocks’ market caps match EQIX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 48.3 hedge funds with bullish positions and the average amount invested in these stocks was $2892 million. That figure was $1546 million in EQIX’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 15 bullish hedge fund positions. Equinix, Inc. (REIT) (NASDAQ:EQIX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EQIX is 41.8. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on EQIX as the stock returned 21.6% since the end of the first quarter (through 6/18) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.