Cobalt International Energy, Inc. (CIE): Are Hedge Funds Right About This Stock?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Cobalt International Energy, Inc. (NYSE:CIE) based on that data.

Cobalt International Energy, Inc. (NYSE:CIE) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. At the end of this article we will also compare CIE to other stocks including Curtiss-Wright Corp. (NYSE:CW), Firstmerit Corp (NASDAQ:FMER), and Regal Entertainment Group (NYSE:RGC) to get a better sense of its popularity.

Follow Cobalt International Energy Inc. (NYSE:CIE)

At the moment there are many gauges stock traders can use to size up stocks. Two of the less utilized gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outpace the broader indices by a healthy amount (see the details here).

Now, let’s take a look at the key action surrounding Cobalt International Energy, Inc. (NYSE:CIE).

What have hedge funds been doing with Cobalt International Energy, Inc. (NYSE:CIE)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Paulson’s Paulson & Co has the biggest position in Cobalt International Energy, Inc. (NYSE:CIE), worth close to $295.6 million, amounting to 1.5% of its total 13F portfolio. The second most bullish fund manager is John Paulson of Paulson & Co, with a $138.1 million position; 0.7% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions encompass Stephen C. Freidheim’s Cyrus Capital Partners, John Paulson’s Paulson & Co and Israel Englander’s Millennium Management.

As aggregate interest increased, specific money managers have been driving this bullishness. Highbridge Capital Management, managed by Glenn Russell Dubin, assembled the largest position in Cobalt International Energy, Inc. (NYSE:CIE). Highbridge Capital Management had $5.6 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Chao Ku’s Nine Chapters Capital Management and Jacob Gottlieb’s Visium Asset Management.

Let’s also examine hedge fund activity in other stocks similar to Cobalt International Energy, Inc. (NYSE:CIE). These stocks are Curtiss-Wright Corp. (NYSE:CW), Firstmerit Corp (NASDAQ:FMER), Regal Entertainment Group (NYSE:RGC), and Stifel Financial Corp. (NYSE:SF). This group of stocks’ market caps resemble CIE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CW 17 269563 0
FMER 12 52004 1
RGC 20 102936 1
SF 19 218215 3

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $800 million in CIE’s case. Regal Entertainment Group (NYSE:RGC) is the most popular stock in this table, whereas the least popular one is Firstmerit Corp (NASDAQ:FMER). Cobalt International Energy, Inc. (NYSE:CIE), with 18 hedge fund bullish positions is not the most popular stock in this group, but hedge fund interest is still above average. Although this may imply it is a stock worth considering, we’d we’d rather spend our time focusing on stocks that hedge funds are most collectively bullish on. In this case, RGC might be a better candidate to consider a long position.