BBCN Bancorp, Inc. (BBCN): Are Hedge Funds Right About This Stock?

To many market players, hedge funds are assumed to be bloated, outdated investment tools of an era lost to time. Although there are more than 8,000 hedge funds trading today, Insider Monkey focuses on the top tier of this club, about 525 funds. Analysts calculate that this group has its hands on the majority of the smart money’s total capital, and by tracking their best stock picks, we’ve brought to light a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per 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 outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as key, optimistic insider trading activity is a second way to look at the world of equities. Obviously, there are a number of motivations for a bullish insider to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this tactic if investors understand what to do (learn more here).

Keeping this in mind, it’s important to discuss the newest info for BBCN Bancorp, Inc. (NASDAQ:BBCN).

How are hedge funds trading BBCN Bancorp, Inc. (NASDAQ:BBCN)?

Heading into Q3, a total of 8 of the hedge funds we track were long in this stock, a change of -38% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully.

When using filings from the hedgies we track, Richard S. Pzena’s Pzena Investment Management had the most valuable position in BBCN Bancorp, Inc. (NASDAQ:BBCN), worth close to $34.1 million, accounting for 0.2% of its total 13F portfolio. On Pzena Investment Management’s heels is Ken Gray and Steve Walsh of Bryn Mawr Capital, with a $9 million position; 0.6% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Mario Gabelli’s GAMCO Investors, Israel Englander’s Millennium Management and Neil Chriss’s Hutchin Hill Capital.

Due to the fact BBCN Bancorp, Inc. (NASDAQ:BBCN) has experienced declining interest from the top-tier hedge fund industry, it’s easy to see that there were a few funds that slashed their positions entirely in Q1. Intriguingly, Daniel Lascano’s Lomas Capital Management said goodbye to the biggest position of the “upper crust” of funds we track, valued at close to $2.7 million in stock, and Jim Simons of Renaissance Technologies was right behind this move, as the fund sold off about $0.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds in Q1.

How have insiders been trading BBCN Bancorp, Inc. (NASDAQ:BBCN)?

Insider buying made by high-level executives is at its handiest when the company in focus has seen transactions within the past half-year. Over the last half-year time frame, BBCN Bancorp, Inc. (NASDAQ:BBCN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to BBCN Bancorp, Inc. (NASDAQ:BBCN). These stocks are First Interstate Bancsystem Inc (NASDAQ:FIBK), WestAmerica Bancorp. (NASDAQ:WABC), Western Alliance Bancorporation (NYSE:WAL), CVB Financial Corp. (NASDAQ:CVBF), and PacWest Bancorp (NASDAQ:PACW). This group of stocks are in the regional – pacific banks industry and their market caps are closest to BBCN’s market cap.

Using the results demonstrated by Insider Monkey’s studies, regular investors should always watch hedge fund and insider trading activity, and BBCN Bancorp, Inc. (NASDAQ:BBCN) applies perfectly to this mantra.

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