The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we will take a closer look at Equinix Inc (NASDAQ:EQIX) from the perspective of those elite funds.
Is Equinix Inc (NASDAQ:EQIX) the right pick for your portfolio? It looks like the smart money is becoming more confident. The number of bullish hedge fund bets went up by one recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as eBay Inc (NASDAQ:EBAY), NXP Semiconductors NV (NASDAQ:NXPI), and Humana Inc (NYSE:HUM) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s view the key action encompassing Equinix Inc (NASDAQ:EQIX).
How are hedge funds trading Equinix Inc (NASDAQ:EQIX)?
Heading into the fourth quarter, a total of 42 funds tracked by Insider Monkey were long Equinix, up by 2% over the quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Lone Pine Capital, managed by Stephen Mandel, holds the biggest position in Equinix Inc (NASDAQ:EQIX). Lone Pine Capital has a $648.3 million position in the stock, comprising 2.9% of its 13F portfolio. On Lone Pine Capital’s heels is Philippe Laffont of Coatue Management, with a $321.2 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise John H. Scully’s SPO Advisory Corp, Jeffrey Tannenbaum’s Fir Tree, and Panayotis Takis Sparaggis’ Alkeon Capital Management.
As aggregate interest increased, key money managers have been driving this bullishness. Alyeska Investment Group, led by Anand Parekh, created the largest position in Equinix Inc (NASDAQ:EQIX). Alyeska Investment Group had $31.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $22.2 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Ken Griffin’s Citadel Investment Group, and Matthew Tewksbury’s Stevens Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Equinix Inc (NASDAQ:EQIX). We will take a look at eBay Inc (NASDAQ:EBAY), NXP Semiconductors NV (NASDAQ:NXPI), Humana Inc (NYSE:HUM), and Imperial Oil Limited (USA) (NYSEAMEX:IMO). This group of stocks’ market values resemble EQIX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 51 investors holding shares at the end of September and the average amount invested in these stocks was $3.09 billion. That figure was $2.13 billion in Equinix’s case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Imperial Oil Limited (USA) (NYSEAMEX:IMO) is the least popular one with only 6 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. In this regard NXP Semiconductors NV (NASDAQ:NXPI) might be a better candidate to consider a long position.