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This Metric Says You Are Smart to Sell Cullen/Frost Bankers, Inc. (CFR)

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Cullen/Frost Bankers, Inc. (NYSE:CFR) was in 7 hedge funds’ portfolio at the end of March. CFR investors should be aware of a decrease in activity from the world’s largest hedge funds recently. There were 8 hedge funds in our database with CFR positions at the end of the previous quarter.

To most traders, hedge funds are viewed as unimportant, outdated investment vehicles of the past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey look at the upper echelon of this club, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the hedge fund industry’s total asset base, and by watching their best equity investments, we have spotted a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as important, bullish insider trading sentiment is another way to break down the world of equities. Just as you’d expect, there are a number of incentives for an executive to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this tactic if you know what to do (learn more here).

Consequently, we’re going to take a gander at the recent action regarding Cullen/Frost Bankers, Inc. (NYSE:CFR).

How have hedgies been trading Cullen/Frost Bankers, Inc. (NYSE:CFR)?

At Q1’s end, a total of 7 of the hedge funds we track held long positions in this stock, a change of -13% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably.

Cullen/Frost Bankers, Inc. (NYSE:CFR)Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Cullen/Frost Bankers, Inc. (NYSE:CFR). Citadel Investment Group has a $16.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $6.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Dmitry Balyasny’s Balyasny Asset Management, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Cullen/Frost Bankers, Inc. (NYSE:CFR) has faced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedge funds that elected to cut their positions entirely at the end of the first quarter. At the top of the heap, D. E. Shaw’s D E Shaw cut the largest stake of the “upper crust” of funds we watch, valued at close to $3.9 million in stock., and Mike Vranos of Ellington was right behind this move, as the fund said goodbye to about $0.9 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds at the end of the first quarter.

What have insiders been doing with Cullen/Frost Bankers, Inc. (NYSE:CFR)?

Insider buying is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time frame, Cullen/Frost Bankers, Inc. (NYSE:CFR) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Cullen/Frost Bankers, Inc. (NYSE:CFR). These stocks are Texas Capital Bancshares Inc (NASDAQ:TCBI), UMB Financial Corporation (NASDAQ:UMBF), Prosperity Bancshares, Inc. (NYSE:PB), BOK Financial Corporation (NASDAQ:BOKF), and Commerce Bancshares, Inc. (NASDAQ:CBSH). All of these stocks are in the regional – southwest banks industry and their market caps resemble CFR’s market cap.

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