You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
East West Bancorp, Inc. (NASDAQ:EWBC) investors should be aware of a decrease in hedge fund sentiment recently. EWBC was in 21 hedge funds’ portfolios at the end of the third quarter of 2016. There were 22 hedge funds in our database with EWBC holdings at the end of the previous quarter. At the end of this article we will also compare EWBC to other stocks including Brown & Brown, Inc. (NYSE:BRO), CBOE Holdings, Inc (NASDAQ:CBOE), and Cheniere Energy Partners LP Holdings LLC (NYSEMKT:CQH) to get a better sense of its popularity.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
Now, we’re going to take a gander at the new action regarding East West Bancorp, Inc. (NASDAQ:EWBC).
How are hedge funds trading East West Bancorp, Inc. (NASDAQ:EWBC)?
Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 5% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in EWBC at the beginning of this year. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Fisher Asset Management, led by Ken Fisher, holds the number one position in East West Bancorp, Inc. (NASDAQ:EWBC). According to regulatory filings, the fund has a $106.8 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Two Sigma Advisors, led by John Overdeck and David Siegel, which holds a $29.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish include Israel Englander’s Millennium Management, Gregg Moskowitz’s Interval Partners and Cliff Asness’s AQR Capital Management. 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.
Since 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 lies a certain “tier” of hedge funds that slashed their entire stakes by the end of the third quarter. Intriguingly, Sharif Siddiqui’s Alpenglow Capital cut the biggest position of the 700 funds studied by Insider Monkey, comprising close to $7.8 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund said goodbye to about $1.5 million worth of shares.
Let’s go over 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 Brown & Brown, Inc. (NYSE:BRO), CBOE Holdings, Inc (NASDAQ:CBOE), Cheniere Energy Partners LP Holdings LLC (NYSEMKT:CQH), and B/E Aerospace Inc (NASDAQ:BEAV). This group of stocks’ market caps are closest to EWBC’s market cap.
|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 24 hedge funds with bullish positions and the average amount invested in these stocks was $600 million. That figure was $288 million in EWBC’s case. B/E Aerospace Inc (NASDAQ:BEAV) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP Holdings LLC (NYSEMKT:CQH) is the least popular one with only 19 bullish hedge fund positions. East West Bancorp, Inc. (NASDAQ:EWBC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BEAV might be a better candidate to consider taking a long position in.