Is Cobalt International Energy, Inc. (NYSE:CIE) a bargain? The best stock pickers are in a bullish mood. The number of bullish hedge fund bets improved by 3 lately.
If you’d ask most stock holders, hedge funds are perceived as worthless, old financial tools of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey choose to focus on the moguls of this club, around 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total asset base, and by watching their top investments, we have identified a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Equally as important, optimistic insider trading activity is a second way to break down the world of equities. As the old adage goes: there are plenty of stimuli for an upper level exec to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if shareholders know where to look (learn more here).
With these “truths” under our belt, we’re going to take a look at the latest action surrounding Cobalt International Energy, Inc. (NYSE:CIE).
What have hedge funds been doing with Cobalt International Energy, Inc. (NYSE:CIE)?
Heading into 2013, a total of 23 of the hedge funds we track held long positions in this stock, a change of 15% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes considerably.
Of the funds we track, Point State Capital, managed by Sean Cullinan, holds the largest position in Cobalt International Energy, Inc. (NYSE:CIE). Point State Capital has a $40 million position in the stock, comprising 0.6% of its 13F portfolio. On Point State Capital’s heels is John Murphy of Alydar Capital, with a $34 million position; 2.7% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Israel Englander’s Millennium Management, Robert Pohly’s Samlyn Capital and Steven Cohen’s SAC Capital Advisors.
Now, specific money managers were breaking ground themselves. Alydar Capital, managed by John Murphy, created the largest position in Cobalt International Energy, Inc. (NYSE:CIE). Alydar Capital had 34 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $29 million position during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser’s Magnetar Capital, Sean Cullinan’s Point State Capital, and Mark Kingdon’s Kingdon Capital.
What do corporate executives and insiders think about Cobalt International Energy, Inc. (NYSE:CIE)?
Insider trading activity, especially when it’s bullish, is most useful when the company in focus has experienced transactions within the past six months. Over the last half-year time frame, Cobalt International Energy, Inc. (NYSE:CIE) has experienced 1 unique insiders purchasing, and 16 insider sales (see the details of insider trades here).
With the returns exhibited by our studies, everyday investors must always watch hedge fund and insider trading activity, and Cobalt International Energy, Inc. (NYSE:CIE) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.