Institutional investors sold more shares than they bought of the leading U.S. shale oil drillers that operate mostly outside the red-hot Permian Basin in the second quarter, even as the market value of Bakken, Oklahoma and Rockies producers jumped higher.
While buyers of the group of 10 non-Permian independent drillers examined by S&P Global Market Intelligence tended to be large passive index funds such as FMR LLC and BlackRock Inc., sellers were more likely to be more event-driven hedge and private equity funds, Form 13F filings for the second quarter showed. Institutional investors were also ambivalent on the biggest independent drillers in the West Texas-centered Permian. Six of 11 major independent Permian drillers had more shares sold than bought by institutional investors in the second quarter.
At Whiting Petroleum Corp., which mainly produces oil in North Dakota and Colorado, shares gained 139% in the year to June 30. Big buyers in the second quarter were passive index fund managers FMR and Vanguard Group Inc., but active fund managers sold more shares of Whiting. Stock pickers at active fund managers such as Hotchkis & Wiley Capital Management LLC and Key Group Holdings (Cayman) Ltd. reduced their holdings by as much as 99.6%.
Funds were net buyers of Bakken and Oklahoma driller Continental Resources Inc., whose stock doubled year over year, in the second quarter. Legendary hedge fund operator Ken Griffin's Citadel Advisors LLC did not follow that crowd. Citadel cut its stake in Continental 85% in the second quarter.
Bakken, Rockies and Texas producer QEP Resources Inc., another rising stock, had more sellers than buyers but earned a visit from activist investors. D.E. Shaw & Co. LP, which recently pressured the largest U.S. gas producer, EQT Corp., to split its midstream and upstream operations, added 50% more shares of QEP in the second quarter, bringing Shaw's total interest to 4% of the company. Another noted activist, Paul Singer's Elliott Management Corp., also holds 4% and two new investors, Wilks Brothers LLC and RR Partners LP, each bought roughly 1.5%.