How T. Boone Pickens Took Advantage of the Gulf Oil Spill

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 |  Includes: APA, APC, BP, CHK, DVN, ECA, HES, MMR, NE, PXP, QEP, RIG, SII, SLB, SU, WFT
by: Insider Monkey

T. Boone Pickens isn’t your average hedge fund manager. He’s an oilman turned fund manager. Instead of taking risks in the oil fields, he now takes risks in financial markets. His investment strategy is quite straightforward. He forecasts the direction of energy markets and then makes outsized bets in mostly futures and derivatives markets. Depending on his call, he might go long or short. Since he makes directional bets, sometimes his losses are staggering. In 1997, he started a commodities fund which eventually lost 90% in less than two years.

Katherine Burton profiled Boone Pickens in her book “Hedge Hunters." Boone Pickens’ most memorable quote from the book is “most of my ideas work, but the timing gets screwed up every once in a while." Here is an excerpt from the book about Boone Pickens’ performance until 2008:

“His energy stock hedge funds, which invest 90% in equities and 10% in commodities, averaged returns of about 38% a year through mid-2007 since starting in August 2001. His oil and gas commodities fund distributed about $2.8 billion to investors since he started it in 1997. About $1.6 billion of the $4.3 billion BP Capital manages is Pickens’s personal fortune. New clients pay a 1.75% management fee and 30% of any profit.”

Insider Monkey analyzed Boone Pickens’ latest 13F filings. He clearly took advantage of the Gulf oil spill. This legendary oilman added BP PLC (NYSE:BP), Schlumberger Ltd (NYSE:SLB), Noble Corporation (NYSE:NE) and QEP Res Inc. (NYSE:QEP) into his portfolio.

His 10 largest positions and their market values are as follows:

VALUE
NAME OF ISSUER (X1000)
MCMORAN EXPLORATION CO (NYSE:MMR) 20164
BP PLC (BP) 19818
SUNCOR ENERGY INC NEW (NYSE:SU) 18460
CHESAPEAKE ENERGY CORP (NYSE:CHK) 16837
APACHE CORP (NYSE:APA) 16058
WEATHERFORD INTERNATIONAL LT (NYSE:WFT) 14968
SCHLUMBERGER LTD (SLB) 12983
DEVON ENERGY CORP NEW (NYSE:DVN) 12638
ANADARKO PETE CORP (NYSE:APC) 12379
NOBLE CORPORATION BAAR (NE) 11353
Click to enlarge

Boone Pickens completely sold his Transocean (NYSE:RIG) and Smith International Inc (SII) positions. He increased his Apache position by 164%, Plains Exploration and Production (NYSE:PXP) by 82%, Encana Corp (NYSE:ECA) by 58%, and Chesapeake by 26%.

Pickens cut his Hess Corp (NYSE:HES) by 54% and Anadarko by 31%.

Disclosure: I am long CHK.