Hedge Funds Are Betting On East West Bancorp, Inc. (EWBC)

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards East West Bancorp, Inc. (NASDAQ:EWBC).

East West Bancorp, Inc. (NASDAQ:EWBC) investors should pay attention to an increase in hedge fund sentiment of late. East West Bancorp, Inc. (NASDAQ:EWBC) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. There were 24 hedge funds in our database with EWBC positions at the end of the second quarter. Our calculations also showed that EWBC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind let’s take a glance at the recent hedge fund action encompassing East West Bancorp, Inc. (NASDAQ:EWBC).

Fred Cummings of Elizabeth Park Capital

Do Hedge Funds Think EWBC Is A Good Stock To Buy Now?

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the second quarter of 2021. By comparison, 20 hedge funds held shares or bullish call options in EWBC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in East West Bancorp, Inc. (NASDAQ:EWBC) was held by Citadel Investment Group, which reported holding $148 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $90.6 million position. Other investors bullish on the company included Schonfeld Strategic Advisors, AQR Capital Management, and MD Sass. In terms of the portfolio weights assigned to each position MD Sass allocated the biggest weight to East West Bancorp, Inc. (NASDAQ:EWBC), around 5.16% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, dishing out 1.59 percent of its 13F equity portfolio to EWBC.

As one would reasonably expect, some big names were leading the bulls’ herd. Elizabeth Park Capital Management, managed by Fred Cummings, initiated the largest position in East West Bancorp, Inc. (NASDAQ:EWBC). Elizabeth Park Capital Management had $4.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $3.5 million investment in the stock during the quarter. The other funds with brand new EWBC positions are George Soros’s Soros Fund Management, Peter Algert’s Algert Global, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as East West Bancorp, Inc. (NASDAQ:EWBC) but similarly valued. We will take a look at Cable One Inc (NYSE:CABO), Lennox International Inc. (NYSE:LII), Formula One Group (NASDAQ:FWONA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Weibo Corp (NASDAQ:WB), Five9 Inc (NASDAQ:FIVN), and Dr. Reddy’s Laboratories Limited (NYSE:RDY). This group of stocks’ market values resemble EWBC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $817 million. That figure was $526 million in EWBC’s case. Five9 Inc (NASDAQ:FIVN) is the most popular stock in this table. On the other hand Dr. Reddy’s Laboratories Limited (NYSE:RDY) is the least popular one with only 12 bullish hedge fund positions. East West Bancorp, Inc. (NASDAQ:EWBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EWBC is 52.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately EWBC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EWBC were disappointed as the stock returned -0.3% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.