Charles Davidson’s Wexford Capital filed a new Form 4 with the U.S Securities and Exchange Commission on Wednesday, disclosing three transactions conducted over each of the past three days with the result of slashing the fund’s Diamondback Energy Inc (NASDAQ:FANG) holding yet further. Wexford sold off a combined 1.10 million shares in the three transactions, and at an average price of about $71.65. The latest sales bring Wexford’s stake down to just 1.65 million shares. Beyond that, we’ll tak e a look at Wexford’s top new picks from its most recent 13F filing, including Alibaba Group Holding Ltd (NYSE:BABA).
Davidson co-founded Wexford in 1994 and continues to oversee the fund to this day, which manages several separate and strategically unique portfolios. The total value of the fund’s equity portfolio was dramatically lessened during the fourth quarter to just $519.17 million from $1.09 billion at the end of the third quarter. This was partially due to three factors: the pounding that the energy sector took, which constituted more than half of Wexford’s equity portfolio, the fact Wexford closed 76 positions while only opening 14 new ones, and lastly, the fact that it slashed its Diamondback Energy holding, by far its most valuable holding, by 40% during the quarter. Despite that, and the fact Diamondback shares also fell 22% during the quarter, the position actually increased slightly in terms of overall percentage value of Wexford’s portfolio, which demonstrates just how drastically it cut other equities.
Despite that, and the fact Diamondback shares also fell 22% during the quarter, the position actually increased slightly in terms of overall percentage value of Wexford’s portfolio, which demonstrates just how drastically it cut other equities. Diamondback made up 49.54% of the portfolio at the end of the year, up from 49.46%, with 4.30 million shares.
Given the fund’s exposure to energy stocks, it’s not surprising that our methodology predicted Wexford as having one of the worst returns of the third quarter, at -8.1%, though the fund was still calculated as being up 17.7% over the past calendar year. In fact it ranked as the sixth best performing hedge fund we track during the first quarter, with a 21.8% return.
The selloff of so many Wexford positions and the fact it only opened a handful in return make it particularly interesting to note the top 3 of those new picks, as Wexford surely saw something profound in them. As mentioned Alibaba Group Holding Ltd (NYSE:BABA) was one of those, and in fact the top new pick with 118,900 shares. The big move into the Chinese e-commerce giant is somewhat surprising, given the limited investment Wexford makes in the consumer discretionary sector, but it’s top 3 new picks show a clear desire to diversify the portfolio further given the energy situation.