Hedge fund Wexford Capital and insiders have been selling the shares of Midland, Texas-based oil and gas producer Diamondback Energy (NASDAQ:FANG).
Yesterday, Diamondback Energy revealed that Charles Davidson’s Wexford Capital, which used to be the biggest shareholder in the company, has sold 70,000 shares for $68.58 a piece, or $4.8 million. In September alone, excluding the most recent transaction, the fund has sold nearly 500,000 shares of the company representing a total of $34.5 million.
Now that the stock is declining aggressively from the mid $20s, what happened? Well, the two reasons mentioned that lent support to the stock price are being tested, and failing.
First regarding YPF’s perceived top and bottom line growth rate. Whether translated into USDs by the Free Market FX Rate or the Blue Chip Swap FX Rate, given the resulting low growth numbers of the past 4 years, YPF’s metrics should be lowered to reflect this condition and this puts pressure on the current stock price.
Second regarding YPF’s so called insulation from the declining Crude Oil price.While major competitors in the space cut spending by more than $40 Billion to mitigate the difficulties of crude at $45/barrel, YPF maintained its budget unchanged from last year since the Argentine Government kept the price of oil in the $80/barrel range.
So considering the overall outlook, buying the put options of the stock around current levels could be a good strategy.