Do Hedge Funds and Insiders Love BBCN Bancorp, Inc. (BBCN)?

BBCN Bancorp, Inc. (NASDAQ:BBCN) was in 10 hedge funds’ portfolio at the end of the fourth quarter of 2012. BBCN investors should be aware of a decrease in hedge fund sentiment of late. There were 10 hedge funds in our database with BBCN positions at the end of the previous quarter.

According to most shareholders, hedge funds are assumed to be worthless, outdated investment tools of years past. While there are over 8000 funds with their doors open today, we hone in on the crème de la crème of this group, close to 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total capital, and by tracking their top picks, we have brought to light a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are many incentives for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this tactic if you know what to do (learn more here).

With these “truths” under our belt, we’re going to take a look at the recent action encompassing BBCN Bancorp, Inc. (NASDAQ:BBCN).

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

At the end of the fourth quarter, a total of 10 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.

According to our comprehensive database, Richard S. Pzena’s Pzena Investment Management had the biggest position in BBCN Bancorp, Inc. (NASDAQ:BBCN), worth close to $29.4 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, which held a $7.9 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Mario Gabelli’s GAMCO Investors, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

Due to the fact that BBCN Bancorp, Inc. (NASDAQ:BBCN) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few money managers that decided to sell off their entire stakes at the end of the year. Intriguingly, Richard Driehaus’s Driehaus Capital dropped the largest investment of all the hedgies we track, comprising close to $0.3 million in stock. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about BBCN Bancorp, Inc. (NASDAQ:BBCN)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest 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).

Let’s check out hedge fund and insider activity 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 the members of the regional – pacific banks industry and their market caps are similar to BBCN’s market cap.