Cathay General Bancorp (NASDAQ:CATY) has seen an increase in hedge fund interest in recent months.
If you’d ask most market participants, hedge funds are seen as slow, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, we hone in on the masters of this club, close to 450 funds. Most estimates calculate that this group oversees most of the hedge fund industry’s total capital, and by keeping an eye on their top equity investments, we have unearthed a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Just as integral, bullish insider trading activity is another way to break down the financial markets. Obviously, there are a number of motivations for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the valuable potential of this method if piggybackers know what to do (learn more here).
Keeping this in mind, we’re going to take a look at the key action surrounding Cathay General Bancorp (NASDAQ:CATY).
Hedge fund activity in Cathay General Bancorp (NASDAQ:CATY)
In preparation for this quarter, a total of 8 of the hedge funds we track held long positions in this stock, a change of 14% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings significantly.
According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Cathay General Bancorp (NASDAQ:CATY). Citadel Investment Group has a $20.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $2.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism include Jim Simons’s Renaissance Technologies, Cliff Asness’s AQR Capital Management and Matthew Tewksbury’s Stevens Capital Management.
Consequently, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most outsized position in Cathay General Bancorp (NASDAQ:CATY). Millennium Management had 2.3 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Mike Vranos’s Ellington.
What have insiders been doing with Cathay General Bancorp (NASDAQ:CATY)?
Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last half-year time frame, Cathay General Bancorp (NASDAQ:CATY) has experienced 1 unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Cathay General Bancorp (NASDAQ:CATY). These stocks are CVB Financial Corp. (NASDAQ:CVBF), Western Alliance Bancorporation (NYSE:WAL), WestAmerica Bancorp. (NASDAQ:WABC), Glacier Bancorp, Inc. (NASDAQ:GBCI), and Umpqua Holdings Corp (NASDAQ:UMPQ). This group of stocks belong to the regional – pacific banks industry and their market caps resemble CATY’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| CVB Financial Corp. (NASDAQ:CVBF) | 8 | 0 | 5 |
| Western Alliance Bancorporation (NYSE:WAL) | 11 | 2 | 8 |
| WestAmerica Bancorp. (NASDAQ:WABC) | 8 | 0 | 4 |
| Glacier Bancorp, Inc. (NASDAQ:GBCI) | 11 | 0 | 0 |
| Umpqua Holdings Corp (NASDAQ:UMPQ) | 7 | 0 | 0 |
With the returns shown by our time-tested strategies, retail investors must always monitor hedge fund and insider trading sentiment, and Cathay General Bancorp (NASDAQ:CATY) is an important part of this process.
