T. Boone Pickens' Hedge Fund Concentrates on Energy, Drops Basic Materials

BP Capital Management’s second quarter SEC filing shows that the hedge fund manager is focusing solely on energy companies these days. While the firm’s founder and Chief Investment Officer T. Boone Pickens has been publically supporting clean energy technologies, his stock portfolio suggests that he is still a strong believer in dirty energy. After selling-out of its basic materials sector holdings, the fund now holds 100% of its portfolio in the energy sector, specifically oil and natural gas companies.

BP Capital’s top holding, offshore oil drilling and exploration company Transocean Inc (RIG), was trimmed over the quarter by 125,000 shares / $9.2mm. Even after the share sales, the company still accounts for 22.6% of the hedge fund’s portfolio, representing $26.7mm or 360,000 shares. The firm’s other top 5 positions included:

• Suncor Energy Inc (USA) (SU) - $18.81mm; 620,000 Shares, 15.9% of Portfolio
• Occidental Petroleum Corp (OXY) - $17.11mm; 260,000 Shares, 14.5% of Portfolio
• Devon Energy Corp (DVN) - $15.28mm; 280,400 Shares, 12.9% of Portfolio (Purchased 30,400 shares)
• Cabot Oil & Gas Corp (COG) - $8.43mm; 275,000 Shares, 7.1% of Portfolio (Purchased 75,000 shares)

Independent oil and gas companies account for 51% of BP Capital’s portfolio. These companies should be the first to rebound (in the form of higher prices) when demand picks up, including the aforementioned Occidental, Devon, and Cabot, as well as:

• Chesapeake Energy Corp (CHK) - $6.64mm ; 335,000 Shares, 5.6% of Portfolio
• Forest Oil Corp (FST) - $3.88mm ; 260,000 Shares, 3.3% of Portfolio
• XTO Energy Inc (XTO) - $3.62mm ; 95,000 Shares, 3.1% of Portfolio
• Denbury Resources Inc (DNR) - $3.17mm ; 215,000 Shares, 2.7% of Portfolio
• Anadarko Petroleum Corp (APC) - $2.27mm ; 50,000 Shares, 1.9% of Portfolio

Selling Activity

Besides Transocean, BP Capital also trimmed its exposure to oil and gas equipment services provider Schlumberger Ltd (SLB) by selling 75,000 shares, bringing down its holdings to 100,000 shares or $5.4mm. Of the eight positions BP Capital exited, five were basic materials stocks. The remaining three exited positions included oil and gas equipment manufacturer Halliburton Co (HAL), industrial equipment manufacturer Shaw Group (SGR), and independent oil and gas company McMoran Exploration Co (MMR). Although an obvious departure from the fund’s general sentiment towards independent oil and gas companies over the quarter, BP’s divestment of MMR does not come unwarranted. Over the past year, the stock has fallen from a peak of $34 in August 2008 to a recent low of $8, which has been fueled by unsustainable operating margins within the company.

BP Capital exited the following positions over the second quarter:

• Alpha Natural Resources Inc (ANR) - Change -230,000 Shares / $-4.08mm
• Consol Energy Inc (CNX) - Change -150,000 Shares / $-3.79mm
• Fluor Corp (FLR) - Change -219,000 Shares / $-7.57mm
• Foster Wheeler Ltd (FWLT) - Change -222,000 Shares / $-3.88mm
• Halliburton Co (HAL) - Change -200,000 Shares / $-3.09mm
• Massey Energy Co (MEE) - Change -325,000 Shares / $-3.29mm
• McMoran Exploration Co (MMR) - Change -200,000 Shares / $-0.94mm
• Shaw Group Inc (SGR) - Change -80,000 Shares / $-2.19mm

As reported in July, T. Boone’s BP Capital Energy Fund II and Energy Equity Fund II posted 79% and 14% returns, respectively, through the first half of 2009. For more information on BP Capital, please click here. For more information on top hedge funds and portfolio managers, please see, HedgeTracker’s Complete Hedge Fund Directory

Comments

[BullnBear:]

I have always believed that Mr. Pickens has great insight into the energy markets and positioning 100% into energy would seem prudent.

We might have some room to run with individual names in the basic materials sector but I feel like the sector as a whole presents more downside risk at this point.

Aug 23 11:21 PM

[Michael Clark:]

If there is no recovery, if the consumers don't come back, then energy prices will collapse -- and a lot of oil market speculators will collapse with them. And T. Boone Pickens may be one of them.

Aug 24 07:07 AM

[Gene Herrin...:]

T. Boone Pickens is a hair trigger guy who has been fortunate in a lot of circumstances but not all. He will live and die by his often quick decisions.

Aug 24 10:00 AM

[Anthony Alfidi:]

Clean energy, dirty energy, any energy will be needed to meet emerging market demand and pull increasingly scarce resources from the ground. $OXY and $XTO are probably the best bets in Boone's portfolio.

Aug 25 07:13 AM

[BrotherMaynard:]

how'd that energy fund work out for pickens in 2008?

whats that, you say...-95%?

amazing that warren buffett gets routinely thrown under the bus for his financials yet t boone pickens is praised as if he's some sort of luminary when it comes to investing in anything. way to go on that -95% return, t boone. oh yeah...and well done on prop 10.

Aug 29 03:57 PM

[einstein p ...:]

I'm a big fan of the man and respect his knowledge, but his track record hasn't been great the last year.

Buying BUCY at around 28.45 and taking profits on JOYG. Trading out of WLT after a huge gain and adding to positions on ANR, which have not kept pace. Clean coal is going to be part of the agenda, along with natural gas. For an alternative play, I own RTK which is going to be a rocket.

Black gold, gold, and natural gas.... with a bit of old fashioned WWII technology in the mix.

Sep 03 01:04 AM

[AirBoss:]

Remember Mesa LP...

Sep 09 08:44 AM