Activist hedge fund Toms Capital Management is pressing Devon Energy to review strategic alternatives, including a potential sale of the US oil and gas producer, according to a report by CNBC.

Toms believes that that the company's enlarged asset portfolio has created unnecessary complexity and is weighing on its valuation.

Toms, which manages more than $4bn, said in a letter to Devon's board that it has become one of the company's five largest shareholders. The position represents a significant increase from the end of June, when regulatory filings showed the hedge fund outside Devon's top 10 investors.

The campaign follows Devon's completion in May of its merger with Coterra Energy, a transaction that substantially expanded its portfolio in the Delaware Basin, one of the principal producing regions of the Permian Basin in Texas and New Mexico.

The combined company also owns assets in several other major US producing regions, including the Marcellus, Eagle Ford and Powder River basins.

Toms argues that the enlarged portfolio has made Devon more complicated to operate and has contributed to a valuation discount relative to its peers. The hedge fund estimates that the discount is at least one EBITDA multiple point, a potentially material difference given that Devon's shares are trading at approximately 4.5 times projected 2027 EBITDA.

Toms had previously raised the issue of simplifying Devon's portfolio during discussions with the company before sending its latest letter. The hedge fund is now advocating a broader strategic review that could result in the entire company being sold.

The investor argues that a strategic acquirer could subsequently dispose of individual assets that it did not want to retain, potentially transferring the execution risk associated with portfolio sales away from Devon's existing shareholders.

The campaign adds to pressure already facing Devon from Kimmeridge, an energy-focused investment firm that has publicly called on the company to streamline its assets and provide greater clarity over its strategy following the Coterra combination.

Toms has enlisted prominent US litigator Alex Spiro as part of its campaign. Spiro has advised Elon Musk and other high-profile clients and is known for his work in major corporate and legal disputes.

Neither Toms nor Spiro reportedly commented beyond the contents of the shareholder letter.

Toms has previously pursued activist campaigns involving companies including Kenvue, Kellanova and Denbury, making the Devon campaign the latest example of the hedge fund seeking strategic changes at a major corporate holding.

Devon shares gained around 3% on Wednesday, taking their increase for 2026 to more than 31%.