The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on PacWest Bancorp (NASDAQ:PACW) in order to identify whether reputable and successful top money managers continue to believe in its potential.
PacWest Bancorp (NASDAQ:PACW) was in 20 hedge funds’ portfolios at the end of the third quarter of 2015. PacWest Bancorp (NASDAQ:PACW) has experienced a decrease in hedge fund sentiment of late. There were 22 hedge funds in our database with PacWest Bancorp (NASDAQ:PACW) holdings at the end of the previous quarter. At the end of this article, we will also compare PacWest Bancorp (NASDAQ:PACW) to other stocks including Brunswick Corporation (NYSE:BC), Cheniere Energy Partners LP Holdings LLC (NYSEMKT:CQH), and Penske Automotive Group, Inc. (NYSE:PAG) to get a better sense of its popularity.
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According to most traders, hedge funds are seen as underperforming, old financial tools of the past. While there are more than 8000 funds with their doors open at present, our researchers look at the elite of this club, about 700 funds. It is estimated that this group of investors shepherd bulk of the smart money’s total asset base, and by paying attention to their best investments, Insider Monkey has brought to light various investment strategies that have historically outstripped the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s check out the fresh action surrounding PacWest Bancorp (NASDAQ:PACW).
What have hedge funds been doing with PacWest Bancorp (NASDAQ:PACW)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish in this stock, a decrease of 9% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to publicly available data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management, had the largest position in PacWest Bancorp (NASDAQ:PACW), worth close to $93.1 million, amounting to 0.2% of its total 13F portfolio. Coming in second is Cardinal Capital, managed by Amy Minella, which held a $61.9 million position; 3.9% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism contain Lee Munder’s Lee Munder Capital Group, Matthew Lindenbaum’s Basswood Capital and Gregg J. Powers’ Private Capital Management.
Seeing as PacWest Bancorp (NASDAQ:PACW) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of funds who sold off their full holdings in the third quarter. At the top of the heap, Renaissance Technologies cut the largest stake of all the hedgies followed by Insider Monkey, comprising close to $16.1 million in stock, and Phill Gross and Robert Atchinson of Adage Capital Management was right behind this move, as the fund said goodbye to about $2.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to PacWest Bancorp (NASDAQ:PACW). These stocks are Brunswick Corporation (NYSE:BC), Cheniere Energy Partners LP Holdings LLC (NYSEMKT:CQH), Penske Automotive Group, Inc. (NYSE:PAG), and Brown & Brown, Inc. (NYSE:BRO). This group of stocks’ market values are similar to PacWest Bancorp (NASDAQ:PACW)’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 20 hedge funds with bullish positions and the average amount invested in these stocks was $346 million. PacWest Bancorp (NASDAQ:PACW) is not the most popular stock in this group but hedge fund interest is still above average. Hedge funds from our database held $232 million worth of its stock at the end of September. This may be interpreted as a slightly positive sign, but a further analysis is required to assess the profitability of the investment.