We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards PacWest Bancorp (NASDAQ:PACW) and determine whether hedge funds skillfully traded this stock.
PacWest Bancorp (NASDAQ:PACW) investors should pay attention to an increase in hedge fund interest lately. PacWest Bancorp (NASDAQ:PACW) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 29 hedge funds in our database with PACW positions at the end of the second quarter. Our calculations also showed that PACW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s go over the fresh hedge fund action regarding PacWest Bancorp (NASDAQ:PACW).
Do Hedge Funds Think PACW Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the second quarter of 2021. On the other hand, there were a total of 28 hedge funds with a bullish position in PACW a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Cardinal Capital held the most valuable stake in PacWest Bancorp (NASDAQ:PACW), which was worth $232.4 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $92.2 million worth of shares. Millennium Management, Fisher Asset Management, and Azora Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to PacWest Bancorp (NASDAQ:PACW), around 5.58% of its 13F portfolio. Azora Capital is also relatively very bullish on the stock, dishing out 4.35 percent of its 13F equity portfolio to PACW.
Consequently, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in PacWest Bancorp (NASDAQ:PACW). Balyasny Asset Management had $36.1 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $2.9 million position during the quarter. The following funds were also among the new PACW investors: Matthew Hulsizer’s PEAK6 Capital Management, Michael Gelband’s ExodusPoint Capital, and Peter Algert’s Algert Global.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PacWest Bancorp (NASDAQ:PACW) but similarly valued. We will take a look at Ashland Global Holdings Inc.. (NYSE:ASH), Healthequity Inc (NASDAQ:HQY), Mister Car Wash Inc. (NYSE:MCW), International Game Technology PLC (NYSE:IGT), DeVry Inc. (NYSE:DV), HollyFrontier Corporation (NYSE:HFC), and SLM Corp (NASDAQ:SLM). This group of stocks’ market caps match PACW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASH | 26 | 800709 | -2 |
| HQY | 26 | 264175 | 6 |
| MCW | 24 | 4229422 | 24 |
| IGT | 36 | 490976 | 4 |
| DV | 10 | 496623 | 10 |
| HFC | 24 | 411801 | -6 |
| SLM | 27 | 891503 | 0 |
| Average | 24.7 | 1083601 | 5.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $1084 million. That figure was $701 million in PACW’s case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand DeVry Inc. (NYSE:DV) is the least popular one with only 10 bullish hedge fund positions. PacWest Bancorp (NASDAQ:PACW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PACW is 83.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on PACW as the stock returned 3% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
