In this article we will check out the progression of hedge fund sentiment towards Western Alliance Bancorporation (NYSE:WAL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Western Alliance Bancorporation (NYSE:WAL) an excellent investment now? Prominent investors were getting more optimistic. The number of long hedge fund bets advanced by 5 in recent months. Western Alliance Bancorporation (NYSE:WAL) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistic is 34. Our calculations also showed that WAL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 23 hedge funds in our database with WAL positions at the end of the first quarter.
In the 21st century investor’s toolkit there are tons of gauges stock market investors use to evaluate publicly traded companies. A couple of the less utilized gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outpace their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Clint Carlson of Carlson Capital
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Do Hedge Funds Think WAL Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in WAL 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, Millennium Management was the largest shareholder of Western Alliance Bancorporation (NYSE:WAL), with a stake worth $38.3 million reported as of the end of June. Trailing Millennium Management was Schonfeld Strategic Advisors, which amassed a stake valued at $28.4 million. Carlson Capital, AQR Capital Management, and Balyasny Asset 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 Global Frontier Investments allocated the biggest weight to Western Alliance Bancorporation (NYSE:WAL), around 8.41% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, setting aside 3.46 percent of its 13F equity portfolio to WAL.
As aggregate interest increased, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Western Alliance Bancorporation (NYSE:WAL). Balyasny Asset Management had $12.4 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also made a $3.3 million investment in the stock during the quarter. The following funds were also among the new WAL investors: Jinghua Yan’s TwinBeech Capital, Greg Eisner’s Engineers Gate Manager, and Donald Sussman’s Paloma Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Western Alliance Bancorporation (NYSE:WAL) but similarly valued. We will take a look at Upstart Holdings, Inc. (NASDAQ:UPST), Americold Realty Trust (NYSE:COLD), First Horizon National Corporation (NYSE:FHN), Denali Therapeutics Inc. (NASDAQ:DNLI), Braskem SA (NYSE:BAK), Arrival (NASDAQ:ARVL), and Aramark (NYSE:ARMK). All of these stocks’ market caps are closest to WAL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UPST | 21 | 2135453 | 8 |
| COLD | 16 | 530325 | 0 |
| FHN | 27 | 151649 | 0 |
| DNLI | 22 | 300703 | -4 |
| BAK | 6 | 16591 | -2 |
| ARVL | 17 | 117875 | 3 |
| ARMK | 36 | 1125117 | -3 |
| Average | 20.7 | 625388 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $625 million. That figure was $188 million in WAL’s case. Aramark (NYSE:ARMK) is the most popular stock in this table. On the other hand Braskem SA (NYSE:BAK) is the least popular one with only 6 bullish hedge fund positions. Western Alliance Bancorporation (NYSE:WAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WAL is 71.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on WAL as the stock returned 23.6% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Western Alliance Bancorporation (NYSE:WAL)
Follow Western Alliance Bancorporation (NYSE:WAL)
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Disclosure: None. This article was originally published at Insider Monkey.
