In this article we are going to use hedge fund sentiment as a tool and determine whether East West Bancorp, Inc. (NASDAQ:EWBC) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
East West Bancorp, Inc. (NASDAQ:EWBC) investors should pay attention to an increase in support from the world’s most elite money managers recently. East West Bancorp, Inc. (NASDAQ:EWBC) was in 25 hedge funds’ portfolios at the end of March. The all time high for this statistic is 30. There were 24 hedge funds in our database with EWBC holdings at the end of December. Our calculations also showed that EWBC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Do Hedge Funds Think EWBC Is A Good Stock To Buy Now?
At the end of March, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in EWBC over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in East West Bancorp, Inc. (NASDAQ:EWBC) was held by Citadel Investment Group, which reported holding $161.5 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $92.1 million position. Other investors bullish on the company included Holocene Advisors, Millennium Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position MD Sass allocated the biggest weight to East West Bancorp, Inc. (NASDAQ:EWBC), around 4.28% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, dishing out 0.85 percent of its 13F equity portfolio to EWBC.
As one would reasonably expect, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in East West Bancorp, Inc. (NASDAQ:EWBC). Balyasny Asset Management had $8.3 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new EWBC investors: Michael Gelband’s ExodusPoint Capital, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Greg Eisner’s Engineers Gate Manager.
Let’s now take a look at hedge fund activity in other stocks similar to East West Bancorp, Inc. (NASDAQ:EWBC). We will take a look at Bright Horizons Family Solutions Inc (NYSE:BFAM), ICON Public Limited Company (NASDAQ:ICLR), Pentair plc (NYSE:PNR), Molson Coors Beverage Company (NYSE:TAP), MKS Instruments, Inc. (NASDAQ:MKSI), Dun & Bradstreet Holdings, Inc. (NYSE:DNB), and Dr. Reddy’s Laboratories Limited (NYSE:RDY). This group of stocks’ market values resemble EWBC’s market value.
|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 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $493 million. That figure was $467 million in EWBC’s case. Molson Coors Beverage Company (NYSE:TAP) is the most popular stock in this table. On the other hand Dr. Reddy’s Laboratories Limited (NYSE:RDY) is the least popular one with only 12 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 overall hedge fund sentiment score for EWBC is 60.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately EWBC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EWBC were disappointed as the stock returned -1.1% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.