Should You Buy Cabot Oil & Gas Corporation (COG)?

Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Cabot Oil & Gas Corporation (NYSE:COG).

Is Cabot Oil & Gas Corporation (NYSE:COG) a buy, sell, or hold? Hedge funds are getting more bullish. The number of long hedge fund positions rose by 6 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Kohl’s Corporation (NYSE:KSS), Hasbro, Inc. (NASDAQ:HAS), and NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) to gather more data points.

With all of this in mind, let’s view the recent action regarding Cabot Oil & Gas Corporation (NYSE:COG).

How are hedge funds trading Cabot Oil & Gas Corporation (NYSE:COG)?

At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Cabot Oil & Gas Corporation (NYSE:COG). Citadel Investment Group has a $120.3 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Stelliam Investment Management, managed by Ross Margolies, which holds a $47.4 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include D E Shaw and Jorge Paulo Lemann’s 3G Capital.

Consequently, specific money managers were breaking ground themselves. Stelliam Investment Management, managed by Ross Margolies, initiated the biggest position in Cabot Oil & Gas Corporation (NYSE:COG). Stelliam Investment Management had $47.4 million invested in the company at the end of the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Todd J. Kantor’s Encompass Capital Advisors, and Steve Galbraith’s Herring Creek Capital.

Let’s check out hedge fund activity in other stocks similar to Cabot Oil & Gas Corporation (NYSE:COG). These stocks are Kohl’s Corporation (NYSE:KSS), Hasbro, Inc. (NASDAQ:HAS), NASDAQ OMX Group, Inc. (NASDAQ:NDAQ), and Arch Capital Group Ltd. (NASDAQ:ACGL). All of these stocks’ market caps match COG’s market cap.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $457 million in COG’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Cabot Oil & Gas Corporation (NYSE:COG) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.