Boone Pickens' Capital Funds Down; Investors Withdrawing Money

In what seems like an endless cycle of hedge fund withdrawals and redemptions, it should come as no surprise that investors in Boone Pickens' BP Capital hedge funds are seeking their money back. Let the redemption bloodbath begin. In addition, it seems as if BP Capital is partly responsible for the massive sell-off in energy equities.

We first got word of Boone's poor performance towards the end of September, when we noted that his equities fund was -30% through August, and his commodities fund was -84% through the same period. In his recent appearance on "60 Minutes," Boone noted that he and his firm had lost around $2 billion since the peak in June. In addition, in a recent Wall Street Journal article, they note that nearly 50% of investors are withdrawing their money from the fund, which has seen losses of nearly 60% now. They also noted that Boone moved nearly everything into cash a few weeks ago, to protect the funds from further downside risk.

Therefore, it’s clear that Boone was one (of I'm sure many) hedge funds who were selling off entire positions over the past few weeks. As we detailed in our most recent look at BP's portfolio holdings, Boone runs an energy-centric equities fund. So, some of his holdings such as Transocean (RIG), Suncor (SU), Occidental Petroleum (OXY), Schlumberger (SLB), Halliburton (HAL), Chesapeake (CHK), and many more listed here have undoubtedly seen selling over the past few weeks due to Boone moving to cash. Obviously, Boone wasn't solely responsible for the drop-off, but it looks like he was definitely one of the culprits. We won't know for sure which, if any, of his positions he is still holding until the next 13F filing is released in the coming weeks. However, it sounds as if he has hardly any positions right now as he prepares to meet investor redemptions/withdrawals.

The cycle of hedge fund redemptions/withdrawals undoubtedly will provide ample opportunities, which I recently detailed here. However, they will require patience and discipline to scale into the names as there is absolutely no way to gauge when the carnage will pass. Energy equities are by far some of the biggest casualties of the sell-off and are thus some of the most attractive for longer-term investors. In addition, for once, I actually agree with the analyst community, who point out attractive opportunities in the energy sector. However, then again, those opportunities could get even more attractive as we undoubtedly face strong waves of continued forced selling.

Disclosure: None

Comments

[NOWHEREMAN:]

Since poor TBoone will help "Green" the US, its only fitting that he redistribute his wealth also.

Vote for "Change", help TBoone.

Vote for Barak Hussein Obama.

BTW, TBoone has also been selling shares of his favorite company, CLNE.

2008 Oct 29 09:24 AM

[Mac77:]

There is really nothing new here...most people confuse investing skill with luck. Those who "Win" at trading are simply taking "Risk" at the right time...

those who "Loose" are risking at the wrong time. Boone Pickens looks bad now that oil/energy is in a downward trend...he will look like a genius when the uptrend in energy stocks resumes....and make no mistake, he will not be in cash then.

Bottom line Risk and Reward share the same seat on the ferris wheel. It's a ride that we all must take. Just don't be arrogant enough to assume that you are being smart when your trade Wins or Dumb when you it Looses.

2008 Oct 29 10:05 AM

[NOWHEREMAN:]

And Pigs Get Slaughtered...there were a lot of pigs out in the ethanol patch and it has spread to the solar arena as well.

Remember to vote for Barak Hussein Obama, he will "green" the environment and make everyone rich. But as soon as you feel rich, he will redistribute your wealth to those who aren't wealthy. Why bother, just wait for the wealth to trickle down.

2008 Oct 29 11:34 AM

[ValueInvestor:]

Looks like everything is reverting to its mean.

2008 Oct 29 12:51 PM

[helplessobs...:]

Wow, the Ultra Pro Oil and Gas ETF DIG has crashed from $125 at the top to $30 now. Now that is a takedown Texas style that even T Boone can appreciate.

2008 Oct 29 11:50 PM

[Janice Z Wong:]

I enjoy reading your articles on the big hedgefund players. Hope you can dig up some information of what is Richard Perry is doing with his fund. Thanks, Janice
money.cnn.com/2008/10/.../

2008 Nov 01 02:22 AM

[applesauce:]

Obama will certainly help the energy industy pay more taxes so they will stop investing in the US and go abroad even more than today, Hal already has one foot out the door. With the slowing in new discoveries the cost of energy will skyrocket if and when the economy gets it's footing. In five years
we will be having the same conservation, "it will take five to ten years to get the oil so why try now." We have been without a thoughtful energy plan since the early 70's and Mr. Barry Obama will not have one that helps this counrty . We need to build some Nuke plants, use nat gas, coal, wind, solarand bio-fuels in that order.

2008 Nov 01 12:59 PM

[Market Folly:]

Janice,
I don't have much on Perry currently, but here is one of his recent investor letters: www.marketfolly.com/20...

2008 Nov 02 09:02 PM

[Pipo:]

Boone Pickens is expecting oil to go back to 100 USD in 2009.

oiltradersblog.blogspo.../

But all major forecasters excluding Jim Rogers are bearish on oil.

2008 Nov 09 12:13 PM

[mn33:]

the only thing boone is pickens now is his nose.

2008 Nov 10 03:48 PM