Crexus Investment Corp (CXS): Hedge Funds and Insiders Are Bearish, What Should You Do?

Crexus Investment Corp (NYSE:CXS) shareholders have witnessed a decrease in support from the world’s most elite money managers of late.

In today’s marketplace, there are tons of methods market participants can use to monitor Mr. Market. A couple of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the market by a significant margin (see just how much).

Equally as important, bullish insider trading activity is a second way to parse down the marketplace. Just as you’d expect, there are lots of reasons for an insider to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this method if shareholders know where to look (learn more here).

Keeping this in mind, let’s take a gander at the recent action regarding Crexus Investment Corp (NYSE:CXS).

How are hedge funds trading Crexus Investment Corp (NYSE:CXS)?

At the end of the first quarter, a total of 12 of the hedge funds we track held long positions in this stock, a change of -33% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, AQR Capital Management, managed by Cliff Asness, holds the largest position in Crexus Investment Corp (NYSE:CXS). AQR Capital Management has a $36.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Paulson & Co, managed by John Paulson, which held a $31.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that are bullish include Israel Englander’s Millennium Management, Robert Emil Zoellner’s Alpine Associates and Jim Simons’s Renaissance Technologies.

Since Crexus Investment Corp (NYSE:CXS) has faced declining sentiment from the smart money, logic holds that there was a specific group of funds who were dropping their positions entirely at the end of the first quarter. It’s worth mentioning that John Thiessen’s Vertex One Asset Management dumped the largest stake of the 450+ funds we track, valued at an estimated $11 million in stock., and Phill Gross and Robert Atchinson of Adage Capital Management was right behind this move, as the fund sold off about $9.2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 6 funds at the end of the first quarter.

How have insiders been trading Crexus Investment Corp (NYSE:CXS)?

Insider trading activity, especially when it’s bullish, is most useful when the company in focus has seen transactions within the past 180 days. Over the latest 180-day time period, Crexus Investment Corp (NYSE:CXS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Crexus Investment Corp (NYSE:CXS). These stocks are Capstead Mortgage Corporation (NYSE:CMO), Investors Real Estate Trust (NYSE:IRET), Cousins Properties Inc (NYSE:CUZ), Anworth Mortgage Asset Corporation (NYSE:ANH), and iStar Financial Inc. (NYSE:SFI). This group of stocks are in the reit – diversified industry and their market caps are similar to CXS’s market cap.

With the returns exhibited by our tactics, retail investors should always keep an eye on hedge fund and insider trading activity, and Crexus Investment Corp (NYSE:CXS) applies perfectly to this mantra.

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