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Hedge Funds Are Dumping Equinix Inc (EQIX)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Equinix Inc (NASDAQ:EQIX) and determine whether the smart money was really smart about this stock.

Equinix Inc (NASDAQ:EQIX) was in 49 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 51. EQIX investors should be aware of a decrease in hedge fund sentiment lately. There were 55 hedge funds in our database with EQIX holdings at the end of March. Our calculations also showed that EQIX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Rajiv Jain of GQG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we’re going to go over the recent hedge fund action surrounding Equinix Inc (NASDAQ:EQIX).

What does smart money think about Equinix Inc (NASDAQ:EQIX)?

At the end of June, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% 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. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is EQIX A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Rajiv Jain’s GQG Partners has the largest position in Equinix Inc (NASDAQ:EQIX), worth close to $824.4 million, accounting for 3.7% of its total 13F portfolio. The second largest stake is held by Alkeon Capital Management, managed by Panayotis Takis Sparaggis, which holds a $303.5 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions consist of Farallon Capital, Stuart J. Zimmer’s Zimmer Partners and Ian Simm’s Impax Asset Management. In terms of the portfolio weights assigned to each position Tensile Capital allocated the biggest weight to Equinix Inc (NASDAQ:EQIX), around 8.03% of its 13F portfolio. EMS Capital is also relatively very bullish on the stock, dishing out 5.57 percent of its 13F equity portfolio to EQIX.

Seeing as Equinix Inc (NASDAQ:EQIX) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies that decided to sell off their positions entirely by the end of the second quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cut the biggest investment of all the hedgies tracked by Insider Monkey, worth about $210.7 million in stock. Josh Resnick’s fund, Jericho Capital Asset Management, also sold off its stock, about $50.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks similar to Equinix Inc (NASDAQ:EQIX). We will take a look at Advanced Micro Devices, Inc. (NASDAQ:AMD), Enbridge Inc (NYSE:ENB), The TJX Companies, Inc. (NYSE:TJX), Target Corporation (NYSE:TGT), General Electric Company (NYSE:GE), NetEase, Inc (NASDAQ:NTES), and Duke Energy Corporation (NYSE:DUK). All of these 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 51 2569197 -11
ENB 28 379932 3
TJX 72 2347508 3
TGT 54 3159010 0
GE 57 3186232 -1
NTES 38 4594320 -1
DUK 33 906929 -2
Average 47.6 2449018 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.6 hedge funds with bullish positions and the average amount invested in these stocks was $2449 million. That figure was $2314 million in EQIX’s case. The TJX Companies, Inc. (NYSE:TJX) is the most popular stock in this table. On the other hand Enbridge Inc (NYSE:ENB) is the least popular one with only 28 bullish hedge fund positions. Equinix Inc (NASDAQ:EQIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EQIX is 51.7. 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. This is a slightly positive signal but 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately EQIX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EQIX were disappointed as the stock returned 12.8% during the same time period 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 many of these stocks already outperformed the market so far this year.

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