Pickens's New Investment Strategy: Cash

The Wall Street Journal reports that investors are fleeing T. Boone Pickens' two hedge funds after huge losses over just the last few months.

It was not long ago (in early-July actually), that investors around the world were ogling the oil tycoon's energy stock holdings that had produced gains of 30 percent or more at mid-year.

That was when crude oil was closing in on $150 a barrel.

With the black goo now closing in on just $50 a barrel, there seems to be little interest in the energy patch here in October.

About half of the investors in T. Boone Pickens's energy-oriented equity hedge fund have asked to withdraw their money on the heels of losses of about 60% this year, according to people close to the matter. Mr. Pickens and his investment firm have lost $2 billion since peaking in late June, Mr. Pickens said Sunday on the CBS program "60 Minutes."

His fund, BP Capital, will have about between $400 million and $500 million after expected withdrawals. It started the year with about $2 billion. A few weeks ago, Mr. Pickens moved the fund almost entirely into cash to help ride out the volatility in the energy patch, according to people close to the matter.

Mr. Pickens is expected to personally hold about 20% of the fund after the withdrawals, or about $100 million, after he does some selling along with his investors. He has lost an estimated $400 million or so in his funds this year. 

Energy stocks were on a tear yesterday, the Energy Select Sector SPDR (NYSE:XLE) rising more than 15 percent...

Here's the 60-Minutes segment from two days ago (if you'd prefer a short and silent 5-second commercial instead of a longer, louder 30-second spot, go directly to the CBS website):

Comments

[NOWHEREMAN:]

Don't forget to add in sales of CLNE.


But TBoone will do well with Barak Hussein Obama at the helm. After all Pelosi likes CLNE.

Change, change, change

Go Barak Hussein!

2008 Oct 29 11:39 AM

[famos:]

Hi Tim,

I have never agreed with T. Boone Pickens' energy strategy to begin with, i.e. wind & natural gas as his solution to the U.S. energy problem.

The U.S. energy problem is - the supply of fuel for our transportation needs which is the largest energy user by far.

So Boone's obvious answer is to put wind sails or natural gas conversion tanks on airplanes, railroad trains, automobiles, freight trucks, and go back to sailing ships.

Oh yes, by the way, I remember Boone saying in an interview that he was advocating wind & natural gas for the good of our country, out of the goodness of his heart, - he didn't need the money. Well, he got that right. He's not making money, nor are the investor's that believed him.

famos

2008 Oct 29 12:12 PM

[Chuck LeBeau:]

Re going to cash - better late than never.

He obviously has a high tolerence for financial pain (but not as high as many buy and hold investors that are still holding tight).

Unfortunately his tolerance for pain was higher than that of his investors in his funds so now he's got a problem.

Famos makes a good point about transportation and energy problem. Makes me laugh when I see the T. Boone commercials.

2008 Oct 29 07:53 PM

[Joshua Lacey:]

This past year the exorbitant cost of fuel has seriously damaged our economy.From filling up the car to paying more for every consumer product whose cost of production and shipping was passed on to us there was little left over.We spend less because we have less, this results in even more job losses. OPEC has us over a barrel literally.WE reduce our use cut production by 1.5 million barrels a day & will cut more they say. .Our country needs to invest in reducing our dependence on foreign oil. The 168 Billion they paid out in the last stimulus pkg that did nothing at all for our economy would have gone a long way toward getting us started on the road to energy impendence. Utilizing renewable energy sources would not only provide clean low cost fuel it would create an estimated 1million plus jobs. I just read Jeff Wilson’s new book The Manhattan Project of 2009. I highly recommend this book for anyone interested in seeing America become more energy independent.

2008 Oct 29 08:02 PM

[derryl:]

I agree with fellow bloggers that oil imports used to fuel transportation are a big part of the problem. At 100+ years old internal combustion engines should be an obsolete technology by now. Besides dirt, what else do we use that hasn't been updated over the past century? I say full speed ahead on electric cars and clean coal power, all made in the USA.

2008 Oct 30 09:08 PM