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Diamondback Energy Inc (FANG): Wexford Capital Sells Shares in Underwritten Public Offering

As two filings with the Securities and Exchange Commission showed, Wexford Capital has reduced its position in Diamondback Energy Inc (NASDAQ:FANG) to around 7.20 million shares of the company, equal to 12.7% of the company’s outstanding common stock. Wexford, which is led by Charles Davidson, also revealed selling around 1.44 million shares of Diamondback in one transaction at a price of $75.44 apiece.

Diamondback Energy

Wexford added that the shares have been sold by several of its affiliates under the terms of an underwritten public offering. The secondary public offering involves the sale of 2.5 million shares of Diamondback Energy Inc (NASDAQ:FANG)and will result in proceeds worth $194.3 million, which will go to the selling stockholders, Wexford and Gulfport Energy Corporation (NASDAQ:GPOR).

Nevertheless, despite disposing a large amount of shares, Wexford’s activist position in Diamondback Energy Inc (NASDAQ:FANG) amasses a significant portion of the company. However, Wexford only recently became an activist investor, judging by the nature of its position, the change being probably related to the signing of the Underwriting Agreement and a Lock-Up Agreement, under the terms of which each fund affiliated with Wexford will not sell any shares of Diamondback Energy.

Wexford has been reducing its stake in Diamondback over the last several months. The fund has sold 1.0 million shares at the beginning of July. During the second quarter, the investor cut its stake in the company by 13% to 8.63 million shares, and the same trend can be observed since the first quarter of 2013, when Wexford owned over 16.4 million shares of Diamondback Energy Inc (NASDAQ:FANG). Since the end of March, 2013, the stock of the company gained over 16%, although it has been declining since the beginning of the current year, losing 15% year-to-date.

However, while Wexford has been constantly trimming its stake in the company, other investors have been bullish on Diamondback Energy Inc (NASDAQ:FANG). Rob Citrone‘s Discovery Capital Management raised its position by 86% during the second quarter to 1.21 million shares, while Louis Navellier‘s Navellier & Associates initiated a stake during the same period and reported holding 565,300 shares in its latest 13F filing.

Investors have a reason to be bullish on Diamondback Energy Inc (NASDAQ:FANG) and might be buying shares while they are still trading at a relatively low price. The company has been constantly increasing its revenue over the past several quarters, reporting $127 million for the second quarter, up from just $45 million for the same period of last year. Moreover, the company’s EBITDA more than doubled to $91 million in the second quarter of 2014, from $38 million in the second quarter of 2013. Moreover, the stock of the company trails a P/E of around 42, which is significantly above the industry average of 20.00.

Disclosure: none

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