Diamondback Energy Inc. (FANG, Financial) is an oil and gas exploration and production company with acreage located in the Permian basin in west TX. We were originally holders of Energen, which sold its gas utility business in 2014 to become a pure play Permian Basin exploration and production company. The new, simplified Energen was then acquired by Diamondback in 2018. Despite 2Q19 results that showed good operational execution and intentions to return even more cash to shareholders, the stock declined 17% suffering from a buyer’s strike as investors remained nervous about oil demand going forward given trade concerns and a potential global recession. We see FANG as a superior operator with a strong balance sheet that will benefit once investors start to become more comfortable with the sector.
From Keeley Asset Management's Keeley Small-Mid Cap Value Fund third-quarter 2019 shareholder letter
