In this article you are going to find out whether hedge funds think Western Alliance Bancorporation (NYSE:WAL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Western Alliance Bancorporation (NYSE:WAL) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 34. WAL has seen an increase in hedge fund sentiment recently. There were 28 hedge funds in our database with WAL positions at the end of the second quarter. Our calculations also showed that WAL 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. Now we’re going to take a glance at the recent hedge fund action surrounding Western Alliance Bancorporation (NYSE:WAL).
Clint Carlson of Carlson Capital
Do Hedge Funds Think WAL Is A Good Stock To Buy Now?
At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in WAL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Western Alliance Bancorporation (NYSE:WAL) was held by Millennium Management, which reported holding $67.1 million worth of stock at the end of September. It was followed by Schonfeld Strategic Advisors with a $41.1 million position. Other investors bullish on the company included Carlson Capital, AQR Capital Management, and Gillson Capital. In terms of the portfolio weights assigned to each position Global Frontier Investments allocated the biggest weight to Western Alliance Bancorporation (NYSE:WAL), around 9.53% of its 13F portfolio. JCSD Capital is also relatively very bullish on the stock, designating 4.06 percent of its 13F equity portfolio to WAL.
As aggregate interest increased, some big names were leading the bulls’ herd. Azora Capital, managed by Ravi Chopra, established the largest position in Western Alliance Bancorporation (NYSE:WAL). Azora Capital had $12.2 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $8.4 million investment in the stock during the quarter. The following funds were also among the new WAL investors: John Murphy’s Levin Easterly Partners, Ray Dalio’s Bridgewater Associates, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Western Alliance Bancorporation (NYSE:WAL). These stocks are Essential Utilities Inc (NYSE:WTRG), Playtika Holding Corp. (NASDAQ:PLTK), Fair Isaac Corporation (NYSE:FICO), Black Knight, Inc. (NYSE:BKI), Snap-on Incorporated (NYSE:SNA), Targa Resources Corp (NYSE:TRGP), and Robert Half International Inc. (NYSE:RHI). All of these stocks’ market caps resemble WAL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WTRG | 19 | 435811 | 6 |
| PLTK | 25 | 520101 | -1 |
| FICO | 37 | 1004312 | 9 |
| BKI | 38 | 775299 | 5 |
| SNA | 29 | 551227 | -2 |
| TRGP | 26 | 567252 | 0 |
| RHI | 27 | 318494 | 4 |
| Average | 28.7 | 596071 | 3 |
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 $596 million. That figure was $292 million in WAL’s case. Black Knight, Inc. (NYSE:BKI) is the most popular stock in this table. On the other hand Essential Utilities Inc (NYSE:WTRG) is the least popular one with only 19 bullish hedge fund positions. Western Alliance Bancorporation (NYSE:WAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WAL is 57.9. 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 WAL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WAL were disappointed as the stock returned 1.2% 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.
Follow Western Alliance Bancorporation (NYSE:WAL)
Follow Western Alliance Bancorporation (NYSE:WAL)
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Disclosure: None. This article was originally published at Insider Monkey.
