Should You Go Long in Devon Energy (DVN)?

GoodHaven Capital Management, a concentrated portfolio investment management firm, published its fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 7.93% was recorded by the fund at year end of 2020, below its S&P 500 benchmark that delivered a 17.46% return in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

GoodHaven Capital Management, in their Q4 2020 investor letter, mentioned former WPX Energy, now Devon Energy Corporation (NYSE: DVN) and emphasized their views on the company. Devon Energy Corporation is an Oklahoma City, Oklahoma-based energy company that currently has a $15.2 billion market capitalization. Since the beginning of the year, DVN delivered a 41.87% return, impressively extending its 12-month gains to 256.60%. As of March 25, 2021, the stock closed at $22.35 per share.

Here is what GoodHaven Capital Management has to say about Devon Energy Corporation in their Q4 2020 investor letter:

“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”

Soonthorn Wongsaita/

Our calculations show that Devon Energy Corporation (NYSE: DVN) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Devon Energy Corporation was in 45 hedge fund portfolios, compared to 44 funds in the third quarter. DVN delivered a 46.38% return in the past 3 months.