Cobalt International Energy, Inc. (CIE): Should You Buy Energetically, Too?

Cobalt International Energy, Inc. (NYSE:CIE is one of those companies that knows full well about how quickly winds can change when it comes t the markets. Even the whisper of a hint of a rumor sends a stock down 10 percent in a couple of hours. CIE stock has fallen nearly 40 percent since March – about a 60-percentage-point difference from the overall market, which is up about 20 percent), but some recent news wont’ add to the sentiment. Recently, it was announced that an investigation was being launched to look into a possible breach of fiduciary duty by members of Cobalt International Energy, Inc.’s board of directors. There was no more information available, as the investigation is just underway.

In light of this information, has Cobalt International Energy, Inc. (NYSE:CIE) reached the bottom, and is it time to jump on the buying bandwagon? Investors should be aware of an increase in hedge fund interest lately.

Cobalt International Energy, Inc. (NYSE:CIE)

Hedge fund activity in Cobalt International Energy, Inc. (NYSE:CIE)

Heading into Q4, 43 of the hedge funds tracked by the folks at Insider Monkey were long in this stock, an impressive 39-percent increase from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.

Of the funds tracked by Insider Monkey, Matthew Hulsizer’s PEAK6 Capital Management had the largest position in Cobalt International Energy, Inc. (NYSE:CIE), worth close to $3.18 billion, accounting for 9.3 percent of its total 13F portfolio. Coming in second is Paulson & Co, led by John Paulson, holding a $288.8-million position; the fund has 1.9 percent of its 13F portfolio invested in the stock. Other hedge funds that hold long positions contain Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

Consequently, key hedge funds have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, established the most valuable position in Cobalt International Energy, Inc. (NYSE:CIE). PEAK6 Capital Management had $3.18 billion invested in the company at the end of the quarter. Christopher Medlock James’s Partner Fund Management also made a $16.8-million investment in the stock during the quarter. The other funds with brand new CIE positions are Vince Maddi and Shawn Brennan’s SIR Capital Management, Alec Litowitz and Ross Laser’s Magnetar Capital, and Millennium Management Subsidiary’s Decade Capital Management.

How are insiders trading Cobalt International Energy, Inc. (NYSE:CIE)?

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past six months. Over the latest six-month time period, Cobalt International Energy, Inc. (NYSE:CIE) has experienced two unique insider buys and four insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Cobalt International Energy, Inc. (NYSE:CIE). These stocks are Cabot Oil & Gas Corporation (NYSE:COG), Chesapeake Energy Corporation (NYSE:CHK), Range Resources Corp. (NYSE:RRC), Southwestern Energy Company (NYSE:SWN), and Talisman Energy Inc. (USA) (NYSE:TLM). These stocks are in the independent oil and gas industry and their market caps are closest to CIE’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Cabot Oil & Gas Corporation (NYSE:COG) 47 1 1
Chesapeake Energy Corporation (NYSE:CHK) 40 3 5
Range Resources Corp. (NYSE:RRC) 37 0 5
Southwestern Energy Company (NYSE:SWN) 34 1 7
Talisman Energy Inc. (USA) (NYSE:TLM) 28 0 0

In a very competitive peer group, the recent bullishness has helped Cobalt International Energy, Inc. (NYSE:CIE) move into the No. 2 position as a choice of hedge funds in this group, right on the heels of Cabot Oil & Gas Corporation (NYSE:COG). Cobalt International Energy, Inc. has been an active stock among insiders, but activity in Chesapeake Energy Corporation (NYSE:CHK) and Southwestern Energy Company (NYSE:SWN) are noteworthy.


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