Monday, September 19, 2011

Equinix is our top pick overall.


>>TWST: What are your top picks right now and why?

Mr. Weller: We're pretty long the sector. Equinix is our top pick overall. We felt, and still feel, that valuation is very attractive. If you look at the multiples or valuation on an enterprise value to EBITDA basis - and that's the way we look at it, and I say it that way because from a REIT perspective, the typical valuation metric that REIT analysts will focus on is price to FFO or AFFO or net asset value, but we look at EV/EBITDA - Equinix at approximately seven times forward EBITDA is, we think, pretty attractive. Again, we felt like the last three quarters have all been around restoring confidence that the issues Equinix experienced were company specific as opposed to it being some big negative inflection point for Equinix and for the data center market. I think mission accomplished so far.

Unfortunately, the last few weeks have been devastating to Equinix's share prices, as well as any other stock on my screen because they reported very solid results as I mentioned, and you saw the stock up to $105, and now we're sitting here in the low $80s. We still think that's a good story.

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