Charles Davidson’s Wexford Capital reduced their stake in Diamondback Energy Inc (NASDAQ:FANG) for the second time this quarter. After shedding more than 1.47 million Common Shares in its most recent transaction, the asset management firm now holds around 4.36 million shares, representing 7.7% of the company’s outstanding stock. This is a drastic reduction in its exposure, considering the investment firm’s stake in the company consisted of more than 7.1 million shares last quarter.
Wexford Capital was co-founded by Charles Davidson in 1994 and currently manages around $5.1 billion in assets through a number of hedge fund and private equity portfolios. Wexford Spectrum Fund handles opportunistic and global strategies, Wexford Credit Opportunities Fund tackles multiple strategies and credit investments, and Wexford Catalyst Fund focuses on energy and industrials. The overall strategic vision is overseen by Charles Davidson himself, and is deeply tied to the basic materials sector. In fact, up until last quarter, Diamondback Energy Inc (NASDAQ:FANG) stock made up almost 50% of Wexford Capital’s $1 billion equity portfolio. Considering the firm’s huge exposure to this stock, along with the declining share prices the company has been experiencing over the past six months, Mr Davidson might be wanting to avoid taking on too much of a risk.
Diamondback Energy Inc (NASDAQ:FANG) is a $3.38 billion Texas-based oil and natural gas company. Its primary activities comprise the acquisition, development, exploration, and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas. Since being founded in 2007, share prices have been rising at a very accelerated pace, reaching its peak in June of 2014 and then dropping nearly 30%. This comes as no surprise, since oil prices have experienced a sharp decline throughout the same period, thus reducing profit margins significantly. Thus, Wexford Capital’s repeated shedding of Diamondback stock could be seen a preventive measure, intended to reduce its exposure to the increasingly cheap commodity and the companies that exploit it.
Due to the recent sale of stock, Wexford Capital is not longer Diamondback Energy Inc (NASDAQ:FANG)’s largest institutional shareholder. Nevertheless, the company still enjoys the backing of several hedge funds, some of which have demonstrated a bullish stance towards the stock. Ken Griffin’s Citadel Investment Group for example increased its stake in Diamondback by 89% last quarter, and continues to back the oil and natural gas producer. Rob Citrone’s Discovery Capital Management also increased its exposure to the stock, bringing its holdings to a total of 1.45 million shares, which represents 1.23% of the fund’s equity portfolio. Other institutional shareholder however, have followed Charles Davidson’s lead, and have slowly begun to shed their holdings in Diamondback. In this sense, Columbus Circle Investors reduced its stake in the company by 23%, to less than 760,000 shares.
Disclosure: Pablo Erbar holds no positions in any stocks or funds mentioned