Where Do Hedge Funds Stand On PacWest Bancorp (PACW)?

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards PacWest Bancorp (NASDAQ:PACW).

PacWest Bancorp (NASDAQ:PACW) investors should be aware of an increase in enthusiasm from smart money of late. PacWest Bancorp (NASDAQ:PACW) was in 31 hedge funds’ portfolios at the end of March. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 30 hedge funds in our database with PACW positions at the end of the fourth quarter. Our calculations also showed that PACW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a peek at the new hedge fund action encompassing PacWest Bancorp (NASDAQ:PACW).

Do Hedge Funds Think PACW Is A Good Stock To Buy Now?

At Q1’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PACW over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

More specifically, Cardinal Capital was the largest shareholder of PacWest Bancorp (NASDAQ:PACW), with a stake worth $213.6 million reported as of the end of March. Trailing Cardinal Capital was Citadel Investment Group, which amassed a stake valued at $82.9 million. Basswood Capital, Fisher Asset Management, and Azora Capital 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 Cardinal Capital allocated the biggest weight to PacWest Bancorp (NASDAQ:PACW), around 5.23% of its 13F portfolio. Azora Capital is also relatively very bullish on the stock, designating 3.72 percent of its 13F equity portfolio to PACW.

Now, key hedge funds have been driving this bullishness. Elizabeth Park Capital Management, managed by Fred Cummings, initiated the most outsized position in PacWest Bancorp (NASDAQ:PACW). Elizabeth Park Capital Management had $9.6 million invested in the company at the end of the quarter. Anton Schutz’s Mendon Capital Advisors also initiated a $9.5 million position during the quarter. The other funds with brand new PACW positions are Brian Ashford-Russell and Tim Woolley’s Polar Capital, Christopher Hillary’s Roubaix Capital, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PacWest Bancorp (NASDAQ:PACW) but similarly valued. These stocks are Radian Group Inc (NYSE:RDN), ACI Worldwide Inc (NASDAQ:ACIW), VIZIO Holding Corp. (NYSE:VZIO), UMB Financial Corporation (NASDAQ:UMBF), Sterling Bancorp (NYSE:STL), Rayonier Inc. (NYSE:RYN), and DigitalOcean Holdings, Inc. (NYSE:DOCN). This group of stocks’ market valuations are similar to PACW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RDN 30 436078 -7
ACIW 23 686814 -7
VZIO 19 126361 19
UMBF 13 106723 -7
STL 20 343567 1
RYN 18 428689 2
DOCN 22 197674 22
Average 20.7 332272 3.3

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 $332 million. That figure was $600 million in PACW’s case. Radian Group Inc (NYSE:RDN) is the most popular stock in this table. On the other hand UMB Financial Corporation (NASDAQ:UMBF) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks PacWest Bancorp (NASDAQ:PACW) is more popular among hedge funds. Our overall hedge fund sentiment score for PACW is 86. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately PACW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PACW were disappointed as the stock returned 7.8% since the end of the first quarter (through 7/2) 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 most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.