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Is East West Bancorp, Inc. (NASDAQ:EWBC) Going to Burn These Hedge Funds?

East West Bancorp, Inc. (NASDAQ:EWBC) has experienced an increase in hedge fund interest of late.

East West Bancorp, Inc. (NASDAQ:EWBC)According to most stock holders, hedge funds are viewed as underperforming, outdated financial tools of years past. While there are more than 8000 funds trading today, we hone in on the masters of this group, close to 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds’ total asset base, and by watching their highest performing investments, we have figured out a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Equally as important, optimistic insider trading activity is a second way to break down the marketplace. Obviously, there are many motivations for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this strategy if investors understand where to look (learn more here).

Keeping this in mind, let’s take a peek at the key action surrounding East West Bancorp, Inc. (NASDAQ:EWBC).

What does the smart money think about East West Bancorp, Inc. (NASDAQ:EWBC)?

At year’s end, a total of 16 of the hedge funds we track were long in this stock, a change of 23% from the third quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in East West Bancorp, Inc. (NASDAQ:EWBC). Citadel Investment Group has a $103 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, managed by Ken Fisher, which held a $72 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include David Dreman’s Dreman Value Management, Glenn Russell Dubin’s Highbridge Capital Management and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Now, specific money managers were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, created the biggest position in East West Bancorp, Inc. (NASDAQ:EWBC). Highbridge Capital Management had 6 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $3 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Mike Vranos’s Ellington, and Dmitry Balyasny’s Balyasny Asset Management.

How have insiders been trading East West Bancorp, Inc. (NASDAQ:EWBC)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past six months. Over the last half-year time frame, East West Bancorp, Inc. (NASDAQ:EWBC) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

With the returns exhibited by our tactics, retail investors must always pay attention to hedge fund and insider trading sentiment, and East West Bancorp, Inc. (NASDAQ:EWBC) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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