How do we determine whether Banc of California Inc (NYSE:BANC) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Banc of California Inc (NYSE:BANC) was in 17 hedge funds’ portfolios at the end of the third quarter of 2015. BANC has seen its support among the world’s most elite money managers stall recently, as there were 17 hedge funds in our database with BANC holdings at the end of the previous quarter. At the end of this article we will also compare Banc of California Inc (NYSE:BANC) to other stocks including Rentech Nitrogen Partners LP (NYSE:RNF), Opower Inc (NYSE:OPWR), and Collegium Pharmaceutical Inc (NASDAQ:COLL) to get a better sense of its popularity.
In the financial world, there are many indicators stock market investors employ to assess stocks. A couple of the less utilized indicators are hedge fund and insider trading indicators. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass the broader indices by a significant margin (see the details here).
With all of this in mind, let’s analyze the latest action encompassing Banc of California Inc (NYSE:BANC).
Hedge fund activity in Banc of California Inc (NYSE:BANC)
Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes considerably.
Of the funds tracked by Insider Monkey, Mark Lee’s Forest Hill Capital has the biggest position in Banc of California Inc (NYSE:BANC), worth close to $26 million, amounting to 2.5% of its total 13F portfolio. Sitting in the number two spot is Oaktree Capital Management, managed by Howard Marks, which holds a $24.6 million position; 0.3% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish encompass Robert I. Usdan and Wayne K. Goldstein’s Endicott Management, Anton Schutz’s Mendon Capital Advisors, and Jim Simons’ Renaissance Technologies.
Because Banc of California Inc (NYSE:BANC) has faced bearish sentiment from the smart money, logic holds that there was a specific group of hedgies that elected to cut their full holdings in third quarter. Interestingly, William Black’s Consector Capital dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $3.3 million in stock, and Richard Driehaus of Driehaus Capital was right behind this move, as the fund sold off about $0.4 million worth of shares. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also take a look at hedge fund activity in other stocks similar to Banc of California Inc (NYSE:BANC). These stocks are Rentech Nitrogen Partners LP (NYSE:RNF), Opower Inc (NYSE:OPWR), Collegium Pharmaceutical Inc (NASDAQ:COLL), and Aerie Pharmaceuticals Inc (NASDAQ:AERI). This group of stocks’ market values are closest to BANC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $80 million, nearly equal to the $82 million invested in Banc of California. Aerie Pharmaceuticals Inc (NASDAQ:AERI) is the most popular stock in this table. On the other hand, Rentech Nitrogen Partners LP (NYSE:RNF) is the least popular one with only five bullish hedge fund positions. Banc of California Inc (NYSE:BANC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal and given that hedge funds own 17.90% of its shares, further research into the stock is justified.