At Insider Monkey, we track the investment activity of hedge funds and other large investors by studying their 13F filings. These filings report many equity positions held by the funds at the end of the quarter. As might be expected, the most widely held shares by hedge funds tend to be megacap companies; of the ten most popular stocks among hedge funds, only one has a market capitalization of under $50 billion. So we went through our database and found three stocks which are valued at under $10 billion but still have substantial hedge fund ownership:
Equinix Inc (NASDAQ:EQIX), a $9.5 billion market cap telecommunications company which provides data center services worldwide, was owned by 47 funds at the end of June, up from 37 at the end of March. One of the funds getting into the stock was billionaire John Paulson’s Paulson & Co., which initiated a position of 1 million shares. Equinix is a growth stock: it trades at 95 times trailing earnings, but in its most recent quarter it grew its earnings by 19% compared to the same period a year earlier (and its revenue increased 18%). Wall Street analysts expect $3.86 in earnings per share in 2013, up from an anticipated $2.68 this year, yielding a forward P/E of 51. The stock has nearly doubled this year, and has risen 12% so far this quarter, so it may no longer be a good buy.