We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Cabot Oil & Gas Corporation (NYSE:COG) based on that data.
Is Cabot Oil & Gas Corporation (NYSE:COG) a buy right now? The best stock pickers are becoming less confident. The number of bullish hedge fund positions went down by 6 lately. Our calculations also showed that COG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most investors, hedge funds are seen as underperforming, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open at present, We choose to focus on the aristocrats of this group, about 850 funds. It is estimated that this group of investors handle the majority of all hedge funds’ total capital, and by keeping an eye on their unrivaled picks, Insider Monkey has figured out various investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Paul Singer of Elliott Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the recent hedge fund action regarding Cabot Oil & Gas Corporation (NYSE:COG).
What have hedge funds been doing with Cabot Oil & Gas Corporation (NYSE:COG)?
Heading into the first quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards COG over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Cabot Oil & Gas Corporation (NYSE:COG) was held by D E Shaw, which reported holding $141.7 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $85.4 million position. Other investors bullish on the company included Two Sigma Advisors, Elliott Management, and Deep Basin Capital. In terms of the portfolio weights assigned to each position Deep Basin Capital allocated the biggest weight to Cabot Oil & Gas Corporation (NYSE:COG), around 3.94% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, setting aside 2.85 percent of its 13F equity portfolio to COG.
Since Cabot Oil & Gas Corporation (NYSE:COG) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies that elected to cut their entire stakes last quarter. Intriguingly, Ken Griffin’s Citadel Investment Group said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, valued at an estimated $104.4 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $47.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 6 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Cabot Oil & Gas Corporation (NYSE:COG). We will take a look at Dynatrace, Inc. (NYSE:DT), East West Bancorp, Inc. (NASDAQ:EWBC), Owens Corning (NYSE:OC), and BRF S.A. (NYSE:BRFS). All of these stocks’ market caps are closest to COG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DT | 25 | 614519 | 5 |
| EWBC | 29 | 520620 | -1 |
| OC | 47 | 1080101 | 4 |
| BRFS | 14 | 119708 | 0 |
| Average | 28.75 | 583737 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $584 million. That figure was $461 million in COG’s case. Owens Corning (NYSE:OC) is the most popular stock in this table. On the other hand BRF S.A. (NYSE:BRFS) is the least popular one with only 14 bullish hedge fund positions. Cabot Oil & Gas Corporation (NYSE:COG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. Hedge funds were also right about betting on COG as the stock returned -1.1% during the first quarter (through March 16th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
