Where Do Hedge Funds Stand On East West Bancorp, Inc. (EWBC)?

At Insider Monkey, we pore over the filings of nearly 873 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 June 30th. 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.

East West Bancorp, Inc. (NASDAQ:EWBC) has seen a decrease in enthusiasm from smart money in recent months. East West Bancorp, Inc. (NASDAQ:EWBC) was in 24 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that EWBC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most stock holders, hedge funds are viewed as underperforming, old investment tools of yesteryear. While there are greater than 8000 funds trading at present, We hone in on the upper echelon of this club, about 850 funds. Most estimates calculate that this group of people oversee the majority of the smart money’s total asset base, and by keeping an eye on their best investments, Insider Monkey has formulated numerous investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Lee Ainslie of Maverick Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Now we’re going to take a glance at the fresh hedge fund action encompassing East West Bancorp, Inc. (NASDAQ:EWBC).

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

At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in EWBC a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in East West Bancorp, Inc. (NASDAQ:EWBC), which was worth $152.2 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $85.2 million worth of shares. Holocene Advisors, Millennium Management, and AQR Capital 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 Interval Partners allocated the biggest weight to East West Bancorp, Inc. (NASDAQ:EWBC), around 0.65% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, designating 0.3 percent of its 13F equity portfolio to EWBC.

Judging by the fact that East West Bancorp, Inc. (NASDAQ:EWBC) has faced declining sentiment from the smart money, we can see that there was a specific group of money managers that elected to cut their positions entirely in the second quarter. At the top of the heap, Martin D. Sass’s MD Sass cut the largest stake of the “upper crust” of funds tracked by Insider Monkey, totaling close to $24.3 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund dropped about $10.1 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to East West Bancorp, Inc. (NASDAQ:EWBC). We will take a look at Targa Resources Corp (NYSE:TRGP), Asana Inc. (NYSE:ASAN), Hubbell Incorporated (NYSE:HUBB), Erie Indemnity Company (NASDAQ:ERIE), Everest Re Group Ltd (NYSE:RE), Gerdau SA (NYSE:GGB), and Robert Half International Inc. (NYSE:RHI). This group of stocks’ market caps match EWBC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $480 million in EWBC’s case. Everest Re Group Ltd (NYSE:RE) is the most popular stock in this table. On the other hand Hubbell Incorporated (NYSE:HUBB) is the least popular one with only 15 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. Our overall hedge fund sentiment score for EWBC is 58. 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 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on EWBC as the stock returned 18.6% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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