As Cobalt International Energy (CIE, Financial) plunged to its lowest point since 2011, hedge fund manager John Paulson (Trades, Portfolio) sold a small fraction of his more than 10% stake in the company, according to GuruFocus Real Time Picks.
Cobalt International Energy closed at $10.71 on Wednesday after hitting a new 52-week low of $9.28 on Oct. 14. The company’s stock most recently reacted negatively to its Aug. 5 second-quarter earnings results, in which it reported a widened net loss of $95 million, or $0.23 per diluted share, compared to $79 million, or $0.19 per diluted share, in the second quarter a year ago.
Cobalt’s 10-year stock price history:
Paulson sold 105,500 shares of the company on Oct. 20 at a price per share of $10.79. After the modest reduction, he remained a major shareholder, with 41,751,100 shares in total.
Paulson’s holding history:
Cobalt, an independent oil exploration and production company operating in the Gulf of Mexico and offshore Angola and Gabon, was formed in 2005 and is based in Houston, Texas.
The company’s third quarter results were adversely impacted by impairment charges totaling $42 million related to well drilling in the Gulf of Mexico, as well as $12 million for seismic and exploration expenses and $22 million for general and administrative expenses.
Ron Barn of Baron Funds noted the costs incurred by the company’s well drilling and was positive on the stock’s overall outlook, writing in his fourth quarter 2013 commentary:
“Its shares have been hurt over the last several months by a series of well results that were either completely unsuccessful or less successful than investors had anticipated. The company still has an attractive base of discovered resources and a deep inventory of undrilled prospects providing for long-term upside potential.”
Baron holds a small position in the company, with 25,295 shares, equating to a 0.0018% sliver of his portfolio.
In the second quarter, the company said that at least one of its prospective wells, Anchor #1, had been junked and abandoned due to mechanical difficulty, adding that its replacement would begin producing by early 2015. It had previously forecast that results from the exploration well, operated by Chevron (CVX, Financial), would begin to appear in the second half of 2014. Four other well projects proceeded as planned.
Cobalt has not produced a profit or free cash flow since its inception and held $2.6 billion in cash on its balance sheet at quarter-end, increased from $1.6 billion at first quarter-end.
Based on his average purchase price per share, Paulson has taken an approximate 49% loss on the holding.
For more stock trades of Gurus in real time, visit GuruFocus’ Real Time Picks, a Premium Feature. Not a Premium Member of GuruFocus? Try it free for 7 days here.
