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Diamondback Energy Inc (FANG); Career Education Corp. (CECO): Why Funds Are Cutting Stakes in these Stocks

Charles Davidson’s Wexford Capital continues to reduce its exposure to Diamondback Energy Inc (NASDAQ:FANG), as disclosed in the 13D Form filed with the U.S. Securities and Exchange Commission on Wednesday. According to the filing, the investment firm now holds a position of 2.98 million common shares, representing 5.3% of the company’s outstanding stock. Meanwhile, Richard Blum’s Blum Capital Partners also revealed a reduction in one of its holdings, as it sold around 844,800 shares of Career Education Corp. (NASDAQ:CECO)‘s common stock. Following this transaction, the fund now owns 5.52 million shares, which amount to 8.2% of the company’s outstanding stock.Charles Davidson - Wexford Capital

Wexford Capital is a hedge fund that was launched in 1994 and currently operates numerous portfolios. The Greenwich, Connecticut-based investment firm was co-founded by Charles Davidson, who is presently in charge of overseeing the fund’s strategic vision, while also serving as portfolio manager for the Wexford Spectrum Funds and Wexford Catalyst Funds. Wexford Capital’s equity portfolio is currently valued at around $1 billion, with more than half of its holdings stemming from the energy sector. According to the fund’s last 13F filing which disclosed its positions at the end of the third quarter of 2014, its position in Diamondback Energy Inc (NASDAQ:FANG) actually accounted for almost 50% of its entire equity portfolio, thus constituting its very bullish top pick for the third quarter. Nevertheless, this no longer the case, as the investment firm has been slashing its position in the company repeatedly over the past few months.

At the end of the first quarter of 2013, Wexford Capital had revealed ownership of 16.41 million shares of Diamondback Energy Inc (NASDAQ:FANG) stock, while its holding in the company was reduced to 9.89 million shares a year later. According to the hedge fund’s latest 13D filing, its stake has been reduced to 2.98 million shares, as Mr. Davidson’s firm continue to unload shares. As the energy industry continues to endure troublesome times, the shedding of stock of the oil and natural gas producer does not come as much of a surprise. Furthermore, considering share prices have grown by around 24% over the past year, while the stock gained 221% from January 2013 to December of 2014, it seems the hedge fund has made considerable profit from the sale of a large portion of its stake in the company. Hence, Diamondback Energy Inc (NASDAQ:FANG)’s performance is probably not the reason Wexford Capital has been unloading shares, since shareholders can be quite content with the stock’s development. In fact, the company has significant backing from major institutional investors, such as Ken Griffin’s Citadel Investment Group, which owns 1.93 million shares and continues to bet on the oil producer’s success.