Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Wexford Capital Reduces Stake in Diamondback Energy Inc (FANG) for Second Time This Quarter

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.

Charles Davidson - Wexford Capital

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.