Is PACW Stock A Buy or Sell?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of PacWest Bancorp (NASDAQ:PACW) based on that data.

Is PACW stock a buy? PacWest Bancorp (NASDAQ:PACW) has seen an increase in hedge fund sentiment lately. PacWest Bancorp (NASDAQ:PACW) was in 30 hedge funds’ portfolios at the end of December. The all time high for this statistic is 31. There were 28 hedge funds in our database with PACW positions at the end of the third quarter. Our calculations also showed that PACW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Phil Stone of Fourthstone LLC

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. Now let’s take a look at the recent hedge fund action regarding PacWest Bancorp (NASDAQ:PACW).

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

At the end of December, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PACW over the last 22 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, Cardinal Capital held the most valuable stake in PacWest Bancorp (NASDAQ:PACW), which was worth $128.1 million at the end of the fourth quarter. On the second spot was Basswood Capital which amassed $41.2 million worth of shares. Citadel Investment Group, Arrowstreet Capital, and Fisher Asset Management 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 3.74% of its 13F portfolio. JCSD Capital is also relatively very bullish on the stock, designating 2.85 percent of its 13F equity portfolio to PACW.

With a general bullishness amongst the heavyweights, some big names have jumped into PacWest Bancorp (NASDAQ:PACW) headfirst. Azora Capital, managed by Ravi Chopra, established the most outsized position in PacWest Bancorp (NASDAQ:PACW). Azora Capital had $26.5 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $15.7 million position during the quarter. The other funds with brand new PACW positions are Daniel Johnson’s Gillson Capital, Paul Tudor Jones’s Tudor Investment Corp, and Phil Stone’s Fourthstone LLC.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PacWest Bancorp (NASDAQ:PACW) but similarly valued. These stocks are Texas Capital Bancshares Inc (NASDAQ:TCBI), The Simply Good Foods Company (NASDAQ:SMPL), Agios Pharmaceuticals Inc (NASDAQ:AGIO), Brookfield Business Partners L.P. (NYSE:BBU), Vishay Intertechnology, Inc. (NYSE:VSH), Freedom Holding Corp. (NASDAQ:FRHC), and Green Dot Corporation (NYSE:GDOT). This group of stocks’ market values are similar to PACW’s market value.

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As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $271 million. That figure was $427 million in PACW’s case. Green Dot Corporation (NYSE:GDOT) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 3 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 82.6. 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 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on PACW as the stock returned 59.3% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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