Equinix Inc (EQIX): This Metric Says You Should Still Be Selling
Equinix Inc (NASDAQ:EQIX) has had a bad 2013. Will it get worse?
In the eyes of many market players, hedge funds are perceived as useless, old investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds trading in present day, this site aim at the aristocrats of this club, close to 525 funds. Analysts calculate that this group controls most of the hedge fund industry's total capital, and by watching their highest performing stock picks, we've determined a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Equally as necessary, optimistic insider trading sentiment is another way to look at the investments you're interested in. There are plenty of stimuli for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this tactic if "monkeys" understand what to do (learn more here).
Keeping this in mind, let's discuss the newest info about Equinix Inc (NASDAQ:EQIX).
How have hedgies been trading Equinix Inc (NASDAQ:EQIX)?
At the end of the second quarter, a total of 63 of the hedge funds we track were bullish in this stock, a change of -11% from the first quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.
According to our 13F database, Coatue Management, managed by Philippe Laffont, holds the biggest position in Equinix Inc (NASDAQ:EQIX). Coatue Management has a $849 million position in the stock, comprising 9.4% of its 13F portfolio. Coming in second is Fir Tree, managed by Jeffrey Tannenbaum, which held a $515.9 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include John H. Scully's SPO Advisory Corp, Stephen Mandel's Lone Pine Capital and Daniel S. Och's OZ Management.
Since Equinix Inc (NASDAQ:EQIX) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers that elected to cut their positions entirely at the end of the second quarter. Interestingly, Dan Loeb's Third Point said goodbye to the largest position of the "upper crust" of funds we track, worth close to $91.9 million in stock. Michael Karsch's fund, Karsch Capital Management, also dumped its stock, about $72.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 8 funds at the end of the second quarter.
How have insiders been trading Equinix Inc (NASDAQ:EQIX)?
Insider buying is most useful when the company in focus has seen transactions within the past 180 days. Over the last half-year time frame, Equinix Inc (NASDAQ:EQIX) has experienced zero unique insiders buying, and 10 insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to Equinix Inc (NASDAQ:EQIX). These stocks are Net Element Inc (PINK:NETE), The Ultimate Software Group, Inc. (NASDAQ:ULTI), SINA Corp (NASDAQ:SINA), NetEase, Inc (ADR) (NASDAQ:NTES), and CGI Group Inc. (USA) (NYSE:GIB). This group of stocks are the members of the internet software & services industry and their market caps resemble EQIX's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Net Element Inc (PINK:NETE)
The Ultimate Software Group, Inc. (NASDAQ:ULTI)
SINA Corp (NASDAQ:SINA)
NetEase, Inc (ADR) (NASDAQ:NTES)
CGI Group Inc. (USA) (NYSE:GIB)
Using the returns demonstrated by our studies, average investors must always keep one eye on hedge fund and insider trading sentiment, and Equinix Inc (NASDAQ:EQIX) is an important part of this process.