What Makes Equinix (EQIX) a Long-Term Bet?

Soumya Eswaran
·3 min read
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Baron Funds, an investment management company, released its “Baron Real Estate Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund rose 6.17% (Institutional Shares) compared to a 4.90% return for the MSCI US REIT Index (the “REIT Index”) and an 8.71% return for the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”). For 2022, the fund declined 28.44% compared to a 23.84% decline for the MSCI Real Estate Index and a 25.37% decline for the REIT Index. In addition, please check the fund’s top five holdings to know its best picks in 2022.

Baron Funds highlighted stocks like Equinix, Inc. (NASDAQ:EQIX) in the Q4 2022 investor letter. Equinix, Inc. (NASDAQ:EQIX) is a digital infrastructure company. On January 31, 2023, Equinix, Inc. (NASDAQ:EQIX) stock closed at $738.13 per share. One-month return of Equinix, Inc. (NASDAQ:EQIX) was 8.52%, and its shares gained 3.01% of their value over the last 52 weeks. Equinix, Inc. (NASDAQ:EQIX) has a market capitalization of $68.305 billion.

Baron Funds made the following comment about Equinix, Inc. (NASDAQ:EQIX) in its Q4 2022 investor letter:

"Equinix, Inc. (NASDAQ:EQIX) is a REIT and the premier global operator of network-dense, carrier-neutral colocation data centers. its shares performed well in the quarter after the company reported quarterly results above expectations, raised its full-year guidance and provided a robust demand outlook amid weaker broader macroeconomic conditions. The company’s value proposition of providing mission-critical infrastructure to a highly diversified customer base has garnered pricing power and “must have” versus “nice to have” infrastructure deployments. This allowed Equinix to be a standout within the broader technology space when many companies were reducing their growth outlooks and noting weakening demand.

COVID-19 accelerated digital transformation priorities for many organizations, and we believe that Equinix is poised to continue to benefit from organic growth through new bookings and pricing power, growth of high margin cross connect revenue, and continued geographic expansion through development and select M&A. We believe the combination of these factors will allow Equinix to grow annual cash flow in the high single-digit range.

The shares are valued at a slight premium multiple to most REITs despite superior and more durable cash flow growth prospects."

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Equinix, Inc. (NASDAQ:EQIX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Equinix, Inc. (NASDAQ:EQIX) at the end of the third quarter, which was 38 in the previous quarter.

We discussed Equinix, Inc. (NASDAQ:EQIX) in another article and shared the list of digital transformation companies in the U.S. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.

 

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