Pickens Energy Fund Making a Canada Move

Includes: DBO, FCG, OLO, UCO, UNG, USO
by: Anomalous Investments
  • T. Boone Pickens Energy Fund files $200 Million IPO Prospectus in Canada

For energy investors who like to follow the investment strategy employed by T. Boone Pickens, the iconic energy billionaire, they will soon have an investment option in Canada, as the T. Boone Pickens Energy Fund is looking to raise $200 million in an initial public offering.

A prospectus for the Fund was filed with the Canadian regulators on December 14th and a brief summary is provided below.


The T. Boone Pickens Energy Fund has been created to provide investors with the opportunity for long-term capital growth by providing access to the energy-related investment strategies of TBP Investments Management LLC (the “Portfolio Manager”).

Portfolio Manager

The Portfolio Manager and its management team are led by Mr. T. Boone Pickens, who brings to the Fund years of energy-related investment experience. The Fund will seek to achieve its investment objective by investing the net proceeds of the Offerings in an actively managed portfolio consisting primarily of equity and commodity-related investments within the energy and energy-related sectors.

Mr. Pickens, the founder and a principal of the Portfolio Manager, brings more than 50 years of experience in the oil and gas industry to the evaluation of potential energy investments and energy sector themes. Mr. Pickens was the founder of Mesa Petroleum, which, under his four-decade long leadership, grew to become one of the largest and most influential independent producers of natural gas and oil in the United States and Canada.

Today, Mr. Pickens pursues a wide range of business interests, from water marketing and alternative wind power to Clean Energy Fuels, a clean transportation fuels company he founded and that went public in May 2007. Mr. Pickens is also currently active in the management of a number of privately-offered investment funds that focus on investments in stocks of public companies in various energy sectors and energy-dependent industries and energy futures.

TBP Investments Management LLC, with total assets under management of approximately US $400 million as of September 30, 2009, is a private investment firm that focuses on investments in stocks of public companies in various energy sectors and energy-dependent industries and energy futures.

Investment Strategy

Portfolio investments will include traditional or conventional energy sector investments but may also include alternative energy investments including non-traditional uses for natural gas and renewable energy that are consistent with energy themes and policies espoused by the Portfolio Manager. The Portfolio will be managed with the goal of providing absolute returns in any market environment.

Portfolio Investments

The Portfolio Manager believes that over the long term, the oil and gas sector will provide a favorable environment for growth and attractive investment opportunities due to a combination of depleting oil and gas reserves, global demand growth and ongoing geopolitical instability.

In the near to mid-term, the Portfolio Manager believes that recent reductions in planned capital spending, as well as decreases in oil and gas production by the Organization of the Petroleum Exporting Countries, will result in production shortfalls that will provide support for oil.

The fund’s equity investments will typically consist of liquid stocks that trade on major exchanges, with the majority of equity investments being in U.S. and Canadian companies. Sectors included in the energy and energy-related universe include integrated energy companies, energy service companies and drillers, exploration and production companies, refiners, energy dependent companies and alternative energy companies.

Commodity exposure will generally be acquired through liquid futures and option contracts that trade on the New York Mercantile Exchange or over-the-counter. Futures investments can be expected to be focused on natural gas, Brent Crude and West Texas Intermediate (NYSE:WTI) crude oil gas prices.

Investment Manager

Harris Investment Management, Inc. is the Fund’s investment manager and has retained the Portfolio Manager to manage the Fund’s Portfolio and implement the Fund’s investment strategy. Harris, an indirect wholly-owned subsidiary of Bank of Montreal, had approximately US $14 billion of assets under management as at September 30, 2009. BMO Nesbitt Burns Inc. is responsible for the management and administration of the Fund.

Units and Warrants

The Fund is offering three classes of combined units of the Fund: Class A combined units, Class F combined units, and Class U combined units. Each Combined Unit of a class consists of one transferable, redeemable unit of the class and one transferable warrant for one unit of the class.

The Class F Units and Class U Units will not be listed on any stock exchange, but the Class F Units and the Class U Units will be convertible into Class A Units. The only other differences between Class A Units and Class U Units are that Class A Units (like Class F Units) are denominated in Canadian dollars, whereas Class U Units are denominated in U.S. dollars. The Class A Units and the Class U Units also differ from the Class F Units on the basis of the amount of the Agents’ fees payable on the issuance of Units of the class and the Service Fee, which is not payable in respect of the Class F Units. As a result of these differences, the net asset value (“NAV”) per Unit of the Units of the classes will not be the same.

Investment by T. Boone Pickens

On Closing, Mr. Pickens intends to acquire, directly or indirectly, units of the Fund representing 10% of the total Units issued under the Offering, up to a maximum of US $10 million through the purchase units.


The Fund may utilize leverage through use of a loan facility or margin purchases, in an amount of up to 30% of the NAV of the Fund at the time of the borrowing. The Fund may also achieve leverage by engaging in short selling, provided that the aggregate market value of all unhedged short positions does not exceed 30% of its NAV on a daily marked-to-market basis.

The Fund may also purchase or write equity options, and/or other financial contracts in respect of exchange-listed securities. The net obligations of the Fund under such instruments may not exceed 30% of the NAV of the Fund on a daily marked-to-market basis.

The maximum amount of leverage the Fund may use (other than leverage associated with currency hedging transactions), expressed as the sum of total unhedged long positions plus total unhedged short positions, divided by the Fund’s NAV, is 1.3:1,

Distribution Policy

The Fund does not intend to pay regular distributions to unitholders.

Listing Details

The Toronto Stock Exchange has conditionally approved the listing of the Class A Combined Units, the Class A Units and the Class A Warrants subject to the Fund’s fulfilling all of the requirements of the Toronto Stock Exchange on or before February 22, 2010.

As with all investments decisions, one should consult an investment advisor and tax professional before purchase.

Disclosure: None.