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Analyzing Institutional Investor Activity in Diamondback Energy

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Jun. 13 2016, Updated 8:05 a.m. ET

Diamondback Energy’s 13F filers

In 1Q16, a total of 191 funds were “buyers” of Diamondback Energy’s (SWN) stock while 130 funds were “sellers.” That means that in 1Q16, total buying funds outnumbered total selling funds by 61. As of March 31, 2016, a total 295 13F filers hold FANG in their portfolio. Eight of these 13F filers have FANG in their top ten holdings.

Even when viewed from the aggregate shares point of view, for 1Q16, 13F filers have increased their aggregate FANG position by ~9.6% from ~73.0 million shares to ~80.0 million shares. In notable additions, JPMorgan Chase increased its FANG holdings by ~169% to ~6.4 million shares from ~2.4 million shares.

As of March 31, 2016, Diamondback Energy had ~71.0 million common shares outstanding. The 13F form is an SEC mandate that all institutional investors who manage more than $100 million in assets must submit.

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Diamondback Energy’s ownership statistics by fund objective

Now let’s look at Diamondback Energy activity from funds classified as “growth” funds and “value” funds, according to their management’s prospectus. Diamondback Energy’s ownership by growth funds peaked in May 2014 at ~47% of its total outstanding shares. Since then, the ownership by growth funds has been in a decline, and today it stands at ~23% of Diamondback Energy’s total outstanding shares.

Diamondback Energy’s ownership by value funds has been increasing since September 2014. It has increased from ~2% of FANG’s total outstanding shares in September 2014 to ~13% of FANG’s total outstanding shares as of June 4, 2016.

Short interest in Diamondback Energy

As of June 7, 2016, Diamondback Energy’s total shares shorted, or short interest, stood at ~6.1 million shares, whereas its average daily volume is ~1.3 million. This means FANG’s short interest ratio is ~4.8x. When viewed in terms of float, FANG’s short interest as a percentage of float is ~8.5%.

Short interest statistics are used to judge the market sentiment for a particular stock. Higher short interest indicates a bearish sentiment for stocks. Other crude oil (USO) (UWTI) (DWTI) producers like Murphy Oil (MUR), SM Energy (SM), and WPX Energy (WPX) have short interest as a percentage of float (or short interest ratio) of ~14% (or 4.5x), ~25% (or ~3.2x), and ~15% (or 3.3x), respectively.

In the next parts of this series, we’ll delve into Southwestern Energy’s fundamentals to study why it could be a risky investment if natural gas prices stay low.

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