Equinix Inc (NASDAQ:EQIX) is a $32.05-billion market cap provider of Internet connection and related services. In its Q1 Investor Letter, RiverPark discussed Equinix along with 13 other companies. EQIX, which was the top detractor for RiverPark in February, is one of the top five holdings in the fund’s portfolio. In this article, we’re going to take a look at RiverPark’s comments on EQIX that the fund made in its letter to investors.
Here is what RiverPark said:
EQIX shares had a volatile quarter, being our top detractor in February in response to what the market viewed as mixed 2018 guidance (we took advantage of that sell off to increase our position), and then rebounding nicely in March to be a top contributor that month. The stock ended down for the quarter and was a top detractor. Since that February earnings call, the company’s management team has better explained the longer-term benefits of its planned step up in 2018 operating and capital expenditures, and we believe this message has been well received by investors, leading to the rebound in the company’s shares later in the quarter.
Market demand for the company’s integrated cloud-focused data center space remains robust and properly integrating its recent acquisitions, plus the company’s investments upgrading its various data center functions to better execute on its growth opportunity should lead to long-term growth and future margin expansion.
The wave of hyperscale data center leasing that began in 2015 is still in the early innings, and barriers to entry are rising in the data center industry as scale, multiple locations in all the major markets, and robust security measures are of increasing importance. Equinix is clearly the global partner of choice with the largest scale (the company has invested $17 billion over the last 20 years in creating its portfolio) and the most complete interconnection portfolio in the industry (with 200 data centers across 52 markets in 24 countries, serving all of the major cloud platforms and telecom operators as well as 46% of the Fortune 500 and 1/3 of the Forbes Global 2000). We had trimmed our EQIX position on strength on several occasions in 2017 and then took advantage of the February sell-off to add back to our holdings on weakness. EQIX is a top 5 holding in the portfolio.
On Monday, EQIX closed up 0.22% at $404.23. Its opening price on the last trading day was $403.09. The stock declined 4.89% over the past 12 months, while its year-to-date performance fell 9.55%. Over the past six months, EQIX dropped 10.21%. The stock has a consensus average recommendation of ‘Buy’ and a consensus average target price of $503.26, according to analysts polled by FactSet.
EQIX isn’t a very popular stock among hedge funds covered by Insider Monkey. There were 42 funds in our database as of the end 2017 with positions in the company.