Activist Toms Capital urges Devon Energy in letter to explore alternatives, including a sale

Activist hedge fund Toms Capital Management sent a letter earlier this month to Devon Energy urging the Houston-based oil and gas company to review strategic alternatives, including a sale.

Toms, which manages just over $4 billion in assets, says in the letter viewed by CNBC it is now one of Devon's top five shareholders. The hedge fund was outside of the ten biggest Devon holders as of the end of June, according to the latest filings.

Last May, Devon closed its merger with Coterra Energy, significantly increasing the size of the company's portfolio in the Delaware Basin, a key oil and gas producing sub-basin of the Permian in West Texas and Southeast New Mexico. The deal also brought together a portfolio than now includes the Marcellus, Eagle Ford and Powder River basins, amongst others.

Toms claims that combination of properties brings an undue level of complexity to the company and contribute to what is, in its view, a valuation discount to its peers of at least one multiple point, which is significant given the stock trades at roughly 4.5 times 2027 estimated EBITDA.

Devon has caused frustration among another one of its investors, the energy-focused investment firm Kimmeridge, which has publicly urged the company to streamline its property portfolio and articulate a post-Coterra merger strategy.

In meetings prior to sending its letter, Toms had encouraged a similar strategy and now is urging the company to sell itself. The fund asserted in its letter that a potential strategic buyer of the entire company could subsequently divest assets, shifting the execution risk of such sales away from Devon holders.

Toms Capital is joined in its activist campaign by the noted litigator Alex Spiro, known for his successful track record of combat in the courtroom and advisory relationship with Elon musk and other notable figures.

Spiro and Toms both declined to comment beyond their letter.

Whether Toms, which has waged activist campaigns at companies such as Kenvue, Kellanova and Denbury, will succeed in pushing Devon to sale is far from clear. While major oil companies might have interest in Devon's core position in the Delaware basin, negotiating a transaction at present may be difficult given the volatility in oil prices.

Devon did not yet return a call for comment. Its advisors declined to comment.

Devon shares added about 3% in Wednesday's trading, bringing their 2026 gain to more than 31%.