On November 13, Nemes Rush Group, an investment fund based in Michigan, filed with the Securities and Exchange Commission (SEC) revealing that it sold all 319,503 shares of Viper Energy Partners LP (ticker: VNOM) during the third quarter. The total value of this divestment was estimated at $12.18 million, calculated based on the average share price across that quarter. Prior to this exit, Viper Energy constituted roughly 1.33% of the fund's reportable assets under management (AUM).
Following this sale, Nemes Rush Group's portfolio consisted of significant stakes in technology sector giants, including Broadcom Inc. (NASDAQ: AVGO) at $55.44 million (5.5% of AUM), Apple Inc. (NASDAQ: AAPL) at $52.14 million (5.2%), Microsoft Corp. (NASDAQ: MSFT) at $42.41 million (4.2%), Alphabet Inc. (NASDAQ: GOOGL) at $38.28 million (3.8%), and NVIDIA Corp. (NASDAQ: NVDA) at $37.42 million (3.7%).
Viper Energy’s shares were valued at $38.48 as of the Monday prior to the reporting date, marking a 20% decline over the last twelve months. This downturn stands in contrast to the S&P 500 index, which experienced an approximately 15.5% gain in the same timeframe.
Operational Profile of Viper Energy
Viper Energy specializes in the ownership and management of mineral interests primarily located in the Permian Basin and Eagle Ford Shale regions. The company generates revenue through royalty payments derived from hydrocarbon production by operators on its mineral acreage. As a subsidiary of Diamondback Energy, Viper's business model centers on capitalizing on upstream oil and gas production economics while minimizing exposure to capital expenditures and operational risks associated with direct extraction.
During the trailing twelve months (TTM), Viper reported revenue of $1.19 billion and a net income of approximately $243.66 million. The company offers an annual dividend yield of 5.5%, based on recent pricing.
In the third quarter, Viper Energy produced in excess of 108,000 barrels of oil equivalent per day. It generated $165 million in pro forma cash available for distribution during this period. Viper returned 85% of this cash to shareholders through a combined base and variable dividend payment totaling $0.58 per share, alongside $90 million executed in share repurchases. These actions resulted in an annualized yield exceeding 6% at recent market prices.
Despite these operational metrics, Viper posted a net loss attributed primarily to non-cash impairment charges linked to asset transfers. Importantly, these charges do not reflect immediate operational deficiencies but rather accounting adjustments.
Investment Context and Analysis
The complete liquidation by Nemes Rush Group of its sub-2% holding in Viper Energy may be interpreted as a portfolio management measure following the substantial share price decline, rather than a definitive statement on the company’s fundamentals. Viper’s role as a royalty-focused energy player emphasizes cash flow generation through commodity exposure, dividend distribution, and buybacks rather than high growth.
For diversified funds, trimming or exiting positions in volatile sectors such as income-focused energy assets can be part of maintaining portfolio hygiene, especially after experiencing significant depreciation in share value. Investors should consider this context when evaluating such moves, recognizing that short-term market fluctuations may not necessarily reflect long-term operational viability.
Key Points
- Nemes Rush Group sold its entire Viper Energy stake of 319,503 shares for an estimated $12.18 million, corresponding to 1.33% of its AUM.
- Viper Energy’s shares declined 20% over the past year, contrasting with the 15.5% gains in the S&P 500.
- The company focuses on acquiring and managing mineral interests in key U.S. oil and gas basins to generate royalties, minimizing capital expenditure and operational risk exposure.
- Volatility in Viper Energy’s stock price, reflecting broader commodity price fluctuations and market sentiment, presents investor risk despite steady cash flow and dividends.
- Non-cash impairment charges can impact reported net income, potentially obscuring underlying operational performance in financial statements.
- Investor tolerance for income-focused energy assets varies, and significant price pullbacks may prompt portfolio adjustments irrespective of fundamental changes.