In this article we will analyze whether PacWest Bancorp (NASDAQ:PACW) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
PacWest Bancorp (NASDAQ:PACW) investors should be aware of an increase in support from the world’s most elite money managers recently. PacWest Bancorp (NASDAQ:PACW) was in 33 hedge funds’ portfolios at the end of September. 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. Our calculations also showed that PACW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Michael Gelband of ExodusPoint 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. Now we’re going to take a gander at the latest hedge fund action surrounding 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 bullish on this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in PACW a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Cardinal Capital was the largest shareholder of PacWest Bancorp (NASDAQ:PACW), with a stake worth $232.4 million reported as of the end of September. Trailing Cardinal Capital was Citadel Investment Group, which amassed a stake valued at $92.2 million. 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, designating 4.35 percent of its 13F equity portfolio to PACW.
As aggregate interest increased, key hedge funds have jumped into PacWest Bancorp (NASDAQ:PACW) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable 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 other funds with brand new PACW positions are Matthew Hulsizer’s PEAK6 Capital Management, Michael Gelband’s ExodusPoint Capital, and Peter Algert’s Algert Global.
Let’s now review hedge fund activity in other stocks similar to PacWest Bancorp (NASDAQ:PACW). These stocks are 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). All of these stocks’ market caps resemble 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 | -7 |
| IGT | 36 | 490976 | 4 |
| DV | 10 | 496623 | -6 |
| HFC | 24 | 411801 | -6 |
| SLM | 27 | 891503 | 0 |
| Average | 24.7 | 1083601 | -1.6 |
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. 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 PACW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PACW were disappointed as the stock returned -0.8% 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.
