Is EWBC Stock A Buy or Sell?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not East West Bancorp, Inc. (NASDAQ:EWBC) makes for a good investment right now.

Is EWBC stock a buy? East West Bancorp, Inc. (NASDAQ:EWBC) was in 24 hedge funds’ portfolios at the end of December. The all time high for this statistic is 30. EWBC has experienced an increase in enthusiasm from smart money lately. There were 20 hedge funds in our database with EWBC holdings at the end of September. Our calculations also showed that EWBC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s review the recent hedge fund action regarding East West Bancorp, Inc. (NASDAQ:EWBC).

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

At the end of December, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards EWBC over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in East West Bancorp, Inc. (NASDAQ:EWBC). Citadel Investment Group has a $76.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $67.6 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass Phill Gross and Robert Atchinson’s Adage Capital Management, Brandon Haley’s Holocene Advisors and Gregg Moskowitz’s Interval Partners. In terms of the portfolio weights assigned to each position MD Sass allocated the biggest weight to East West Bancorp, Inc. (NASDAQ:EWBC), around 1.86% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 1.6 percent of its 13F equity portfolio to EWBC.

Consequently, key money managers have jumped into East West Bancorp, Inc. (NASDAQ:EWBC) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in East West Bancorp, Inc. (NASDAQ:EWBC). Citadel Investment Group had $76.1 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $29.4 million position during the quarter. The following funds were also among the new EWBC investors: Daniel Johnson’s Gillson Capital, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Martin D. Sass’s MD Sass.

Let’s now take a look at 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 The Middleby Corporation (NASDAQ:MIDD), TG Therapeutics Inc (NASDAQ:TGTX), Lumentum Holdings Inc (NASDAQ:LITE), Vornado Realty Trust (NYSE:VNO), Ares Capital Corporation (NASDAQ:ARCC), Zions Bancorporation, National Association (NASDAQ:ZION), and Robert Half International Inc. (NYSE:RHI). This group of stocks’ market values match EWBC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $408 million. That figure was $404 million in EWBC’s case. Lumentum Holdings Inc (NASDAQ:LITE) is the most popular stock in this table. On the other hand Ares Capital Corporation (NASDAQ:ARCC) is the least popular one with only 15 bullish hedge fund positions. East West Bancorp, Inc. (NASDAQ:EWBC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EWBC is 51.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on EWBC as the stock returned 48% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

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