At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards East West Bancorp, Inc. (NASDAQ:EWBC).
Is East West Bancorp, Inc. (NASDAQ:EWBC) undervalued? The best stock pickers are becoming less confident. The number of long hedge fund bets were cut by 4 recently. Our calculations also showed that EWBC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are perceived as slow, old investment tools of yesteryear. While there are greater than 8000 funds in operation today, Our researchers look at the elite of this club, about 850 funds. These money managers command bulk of the hedge fund industry’s total asset base, and by paying attention to their inimitable equity investments, Insider Monkey has come up with several investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the key hedge fund action encompassing East West Bancorp, Inc. (NASDAQ:EWBC).
What does smart money think about East West Bancorp, Inc. (NASDAQ:EWBC)?
Heading into the second quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in EWBC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Adage Capital Management was the largest shareholder of East West Bancorp, Inc. (NASDAQ:EWBC), with a stake worth $47.3 million reported as of the end of September. Trailing Adage Capital Management was Fisher Asset Management, which amassed a stake valued at $36.9 million. Two Sigma Advisors, D E Shaw, 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 Neo Ivy Capital allocated the biggest weight to East West Bancorp, Inc. (NASDAQ:EWBC), around 0.47% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, designating 0.36 percent of its 13F equity portfolio to EWBC.
Because East West Bancorp, Inc. (NASDAQ:EWBC) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedgies that slashed their full holdings in the first quarter. Intriguingly, Clint Carlson’s Carlson Capital dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, totaling about $56.1 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $24.5 million worth. These moves are important to note, as total hedge fund interest fell by 4 funds in the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as East West Bancorp, Inc. (NASDAQ:EWBC) but similarly valued. We will take a look at Silicon Laboratories Inc. (NASDAQ:SLAB), Deckers Outdoor Corp (NYSE:DECK), Vir Biotechnology, Inc. (NASDAQ:VIR), and Jabil Inc. (NYSE:JBL). All of these stocks’ market caps resemble EWBC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $180 million in EWBC’s case. Deckers Outdoor Corp (NYSE:DECK) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 4 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 calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on EWBC as the stock returned 53.5% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.