The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Western Alliance Bancorporation (NYSE:WAL) .
Is Western Alliance Bancorporation (NYSE:WAL) a healthy stock for your portfolio? The smart money is undoubtedly selling. The number of long hedge fund positions went down by 8 recently. There were 34 hedge funds in our database with WAL holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as RSP Permian Inc (NYSE:RSPP), Bright Horizons Family Solutions Inc (NYSE:BFAM), and Hudson Pacific Properties Inc (NYSE:HPP) to gather more data points.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Now, let’s take a gander at the recent action encompassing Western Alliance Bancorporation (NYSE:WAL).
Hedge fund activity in Western Alliance Bancorporation (NYSE:WAL)
At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from the second quarter of 2016. On the other hand, there were a total of 22 hedge funds with a bullish position in WAL at the beginning of this year. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the biggest position in Western Alliance Bancorporation (NYSE:WAL), worth close to $70.4 million, comprising 0.1% of its total 13F portfolio. On Millennium Management’s heels is Sirios Capital Management, led by John Brennan, holding a $36.2 million position; 2% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions encompass Anand Parekh’s Alyeska Investment Group, Robert B. Gillam’s McKinley Capital Management and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.