How an Energy Royalty Play Lost a Major Investor: The $12M Viper Energy Sell-Off Story

When institutional investors quietly exit positions, it often tells a story worth listening to. Recently, Michigan-based Nemes Rush Group closed the book on its Viper Energy (NASDAQ: VNOM) stake—a move that raises important questions about where capital is flowing in today’s energy market.

The Exit: By the Numbers

On November 13, a Securities and Exchange Commission (SEC) filing revealed that Nemes Rush Group had fully liquidated its Viper Energy holdings during Q3, offloading 319,503 shares valued at approximately $12.18 million. The position, which had represented 1.33% of the fund’s reportable assets under management, is now reduced to zero.

The timing is notable: Viper Energy shares have declined roughly 20% over the past year, significantly lagging the S&P 500’s 15.5% gain in the same period. This wasn’t a surgical trim of underperformance—it was a complete departure.

Understanding Viper Energy’s Business Model

To make sense of this exit, it helps to understand what Viper Energy actually does. The company doesn’t drill wells or develop infrastructure. Instead, it owns and manages mineral interests across key U.S. oil and gas basins, particularly the Permian Basin and Eagle Ford Shale formations. It functions as a royalty collector: operators extract oil and gas from Viper’s acreage, and the company receives payments based on production volumes.

This model has deep operational merits. Viper Energy generated $1.19 billion in trailing twelve-month revenue with $243.66 million in net income. In Q3 alone, the company produced more than 108,000 barrels of oil equivalent daily and posted $165 million in pro forma cash available for distribution. The company returned 85% of that cash to shareholders through a combined base and variable dividend of $0.58 per share and $90 million in share buybacks—creating an annualized yield exceeding 6% at recent prices.

On paper, that’s a powerful income engine: stable, cash-generative, and shareholder-friendly.

Why the Stock Performance Doesn’t Match Fundamentals

Yet here’s the disconnect: Q3 results included a net loss, primarily driven by non-cash impairment charges tied to asset transfers—not underlying operational weakness. The business functioned well, but the balance sheet took a hit that spooked the market.

Viper Energy trades at $38.48 per share today. For a diversified fund holding a position worth less than 2% of assets, a 20% drawdown creates a decision point: hold for operational recovery or redeploy capital elsewhere? For Nemes Rush Group, the answer was clear.

A Diversified Fund’s Portfolio Hygiene

This may not signal fundamental doubt about Viper Energy’s business model. Institutional exits from sub-2% positions following sharp sell-offs often represent portfolio rebalancing rather than conviction shifts. A fund trimming positions across its tech holdings—AVGO ($55.44M, 5.5% of AUM), AAPL ($52.14M, 5.2%), MSFT ($42.41M, 4.2%), GOOGL ($38.28M, 3.8%), and NVDA ($37.42M, 3.7%)—may simply be rotating into higher-conviction bets.

The Broader Takeaway for Income Investors

What makes this exit noteworthy isn’t the mechanics—it’s what it reveals about investor risk tolerance. Royalty businesses convert commodity exposure into cash distributions and buybacks, yet they remain volatile in share price. When that volatility spikes, even quality operators feel pressure. The question for long-term investors: Is Viper Energy a temporary discount offering an attractive 5.5% dividend yield, or the start of a longer-term underperformance?

With $1.19 billion in annual revenue and consistent capital returns, the underlying business case remains sound. But as Nemes Rush’s departure suggests, patience for share-price volatility has its limits—even when fundamentals hold up.