Is Prosperity Bancshares, Inc. (PB) Going to Burn These Hedge Funds?

Prosperity Bancshares, Inc. (NYSE:PB) was in 7 hedge funds’ portfolio at the end of the first quarter of 2013. PB has experienced a decrease in hedge fund sentiment of late. There were 15 hedge funds in our database with PB holdings at the end of the previous quarter.

In today’s marketplace, there are plenty of gauges investors can use to watch the equity markets. A duo of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can beat their index-focused peers by a healthy amount (see just how much).

Just as integral, bullish insider trading activity is another way to parse down the marketplace. As the old adage goes: there are a number of reasons for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this method if shareholders know what to do (learn more here).

Consequently, let’s take a peek at the latest action regarding Prosperity Bancshares, Inc. (NYSE:PB).

What have hedge funds been doing with Prosperity Bancshares, Inc. (NYSE:PB)?

At Q1’s end, a total of 7 of the hedge funds we track were bullish in this stock, a change of -53% from the first quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Ken Fisher’s Fisher Asset Management had the most valuable position in Prosperity Bancshares, Inc. (NYSE:PB), worth close to $27.7 million, comprising 0.1% of its total 13F portfolio. Coming in second is David Dreman of Dreman Value Management, with a $22.9 million position; 0.6% of its 13F portfolio is allocated to the company. Other peers that are bullish include Dmitry Balyasny’s Balyasny Asset Management, D. E. Shaw’s D E Shaw and Matthew Tewksbury’s Stevens Capital Management.

Since Prosperity Bancshares, Inc. (NYSE:PB) has witnessed a declination in interest from hedge fund managers, logic holds that there lies a certain “tier” of fund managers who sold off their entire stakes last quarter. Interestingly, Jim Simons’s Renaissance Technologies dropped the largest investment of the 450+ funds we watch, comprising close to $6.7 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund sold off about $2.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 8 funds last quarter.

Insider trading activity in Prosperity Bancshares, Inc. (NYSE:PB)

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past six months. Over the last half-year time period, Prosperity Bancshares, Inc. (NYSE:PB) has experienced 1 unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Prosperity Bancshares, Inc. (NYSE:PB). These stocks are Texas Capital Bancshares Inc (NASDAQ:TCBI), BOK Financial Corporation (NASDAQ:BOKF), Cullen/Frost Bankers, Inc. (NYSE:CFR), and Commerce Bancshares, Inc. (NASDAQ:CBSH). This group of stocks are in the regional – southwest banks industry and their market caps are closest to PB’s market cap.