World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is East West Bancorp, Inc. (NASDAQ:EWBC) a buy right now? The smart money is in an optimistic mood. The number of long hedge fund positions rose by 5 lately. Our calculations also showed that ewbc isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a gander at the recent hedge fund action surrounding East West Bancorp, Inc. (NASDAQ:EWBC).
How are hedge funds trading East West Bancorp, Inc. (NASDAQ:EWBC)?
Heading into the fourth quarter of 2018, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EWBC over the last 13 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the most valuable position in East West Bancorp, Inc. (NASDAQ:EWBC), worth close to $128.5 million, comprising 0.2% of its total 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $84.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.
Consequently, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the largest position in East West Bancorp, Inc. (NASDAQ:EWBC). Arrowstreet Capital had $9 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $3 million position during the quarter. The following funds were also among the new EWBC investors: Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Paul Tudor Jones’s Tudor Investment Corp, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as East West Bancorp, Inc. (NASDAQ:EWBC) but similarly valued. These stocks are PagSeguro Digital Ltd. (NYSE:PAGS), Camden Property Trust (NYSE:CPT), RPM International Inc. (NYSE:RPM), and Under Armour Inc (NYSE:UA). This group of stocks’ market values resemble EWBC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAGS | 39 | 1581761 | -9 |
| CPT | 14 | 281370 | -1 |
| RPM | 28 | 491022 | 7 |
| UA | 28 | 700316 | 6 |
| Average | 27.25 | 763617 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $764 million. That figure was $444 million in EWBC’s case. PagSeguro Digital Ltd. (NYSE:PAGS) is the most popular stock in this table. On the other hand Camden Property Trust (NYSE:CPT) is the least popular one with only 14 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PAGS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
