If you own Diamondback (FANG), I recommend you harvest the gains and move the money to CXO, PE, RSPP or CPE. All of these companies are pure plays on the Permian Basin but FANG is trading at a much higher multiple than the rest of the pack. Their ownership of VNOM does justify a higher price, but not this much.
I am not removing FANG from the Sweet 16.
FANG
Re: FANG
FANG closed today at 24.7 X my operating cash flow per share forecast for 2016.
The Sweet 16 as a group is trading at 13.5 X operating cash flow per share.
IMO the companies trading at very high CFPS multiples have limited upside for us. However, Wall Street has a "love affair" going on with FANG and the momentum may take it higher. I'm just telling you that the fundamentals do not justify a much higher share price.
FYI: SM closed today at 4.6 X operating cash flow for 2016.
The Sweet 16 as a group is trading at 13.5 X operating cash flow per share.
IMO the companies trading at very high CFPS multiples have limited upside for us. However, Wall Street has a "love affair" going on with FANG and the momentum may take it higher. I'm just telling you that the fundamentals do not justify a much higher share price.
FYI: SM closed today at 4.6 X operating cash flow for 2016.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group