Newfield Exploration Co. (NFX): Viking Global takes a 5.7% stake

Viking Global, a long/short equity fund run by Andreas Halvorsen, has bought 7.7 million shares in Newfield Exploration Co. (NYSE:NFX), a Houston-based energy company. With a stake of 5.7%, worth around $315 million at today’s market price, Viking Global becomes one of the largest shareholders of the company. The bet is probably an attempt to cash in big on the shale gas revolution, which is set to make the United States energy independent.

Andreas Halvorsen

The move comes soon after the firm released a second quarter earnings report that has beaten the analysts’ estimates by reporting an increase in its earnings per share of $0.44 versus a consensus estimate of $0.40. Newfield Exploration Co. (NYSE:NFX)’s revenue stood at $553 million compared to an estimate of just $513 million. In addition to that, the company has increased its 2014 production guidance, expecting to extract 46.5–48.5 million barrels against previous guidance of 44-48 million barrels.

Analysts have increasingly recommended the company as a “Buy”, despite the recent drop in the share price. Newfield Exploration Co. (NYSE:NFX) stock fell 3.5% during the last month, but that was not enough to shake an astonishing 64% rally since the beginning of the year.  The company trades at $40.40 per share, as of today.

Viking Global, which in its first year of activity returned 89% after fees, is adding a second energy company to its portfolio, after Valero Energy Corporation (NYSE:VLO), a petroleum refiner, where it owns 12 million shares, valued at $644 million. The shift towards energy reflects growing optimism in the Newfield Exploration Co. (NYSE:NFX)’s ability to bring high shareholder returns by riding the shale gas revolution.

Other notable shareholders of Newfield Exploration Co. (NYSE:NFX) are Dmitry Balyasny’s Balyasny Asset Management with a stake of 5.4 million shares, which has a market value of $220 million and Israel Englander’s  Millennium Management, who owns 3.7 million shares worth $115 million, as of the end of the first quarter. Also important, Citadel Investment Group, a hedge fund managed by Ken Griffin owns 2.4 million shares valued at around $100 million, also as of the end of March.

Disclosure: None

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