By Sarah Ryan, Guest Editor
T. Boone Pickens, chair of the private equity firm BP Capital Management, is well known for his investments in gas and oil. In our investigation of the fund holdings of gurus like Carl Icahn and David Einhorn, we took a closer look at Pickens’ latest holdings to see what he is buying and where he is making additions. Here's what we found:
EOG Resources, Inc. (EOG): This Houston-based company specializes in the exploration, development, production and marketing of natural gas and crude oil in the U.S. and overseas. EOG Resources, Inc., hit a 52-week high of 115.17 on February 24, 2011. The company sports a beta of 1.50 and currently has a trailing P/E of 169.10 and a forward P/E of 18.49. Its profit margin is 2.76% and operating margin stands at 5.16%. This is a new buy for Pickens.
National Oilwell Varco, Inc. (NOV): Also a new buy for Pickens, National Oilwell Varco, Inc., designs, constructs, manufactures and sells products and components used in oil and gas drilling and production, specifically focused on rig technology, petroleum services and supplies, and distribution services. The Houston-based company has joint venture agreements with Schlumberger Ltd. (SLB) and the Austrian-based Voestalpine Group. National Oilwell Varco hit a 52-week high of 82.36 on March 4, 2011, and currently has profit and operating margins of 13.71% and 20.13% respectively. Trailing P/E is 19.10, and the company sports a beta of 1.50.
Dynegy, Inc. (DYN): The embattled electric energy company Dynegy, Inc., is one of Pickens’s more surprising new buys. On March 10, 2011, Dynegy named four new directors who will step in and attempt to restructure the company. Two top executives have resigned, and the current board has agreed to step down in June. With the last trade at 5.44 and a current profit margin of -18.37%, Dynegy has discussed selling off plants and might need to seek bankruptcy protection if the company cannot renegotiate with the banks. The company's current operating margin stands a 9.25%, and it sports a beta of 1.14.
Gastar Exploration, Ltd. (GST): Another Houston-based energy company and new buy for Pickens, Gastar specializes in the exploration, development and production of natural gas and oil in the U.S. The company has a trailing P/E of 52.12 and a forward P/E of 26.06. Profit and operating margins stand at 11.47% and 29.22% respectively, and Gastar sports a beta of 1.38. The company recently reported on its fourth quarter earnings in 2010, and reported a 23% increase in oil and gas revenue versus this time last year.
A123 Systems, Inc. (AONE): A123 Systems designs, develops, manufactures and sells rechargeable, lithium-ion batteries and battery systems, primarily in the U.S. The company's current profit margin is -156.77% and operating margin is -153.52%. However, A123 recently announced a production contract with an unnamed, "major North American automaker" to provide batteries for an electric car debuting in 2013. A123 Systems is a new holding for Pickens.
QEP Resources, Inc. (QEP): Pickens increased his holdings in QEP Resources, Inc., a natural-gas focused energy company based in Denver, Colorado. The company hit a 52-week high of 41.97 on February 1, 2011. QEP Resources’ trailing P/E is 20.92 and forward P/E is 19.68. The current profit margin is 14.52% and operating margin is 24.34%.
Plains Exploration and Production (PXP): Pickens added to his holdings in Plains Exploration and Production, a company that focuses on oil and gas production, acquisition and exploration. As of March 13, 2011, the company is currently embroiled in debates over a controversial proposal to drill 136 wells in the Wyoming Range. Currently, PXP has a trailing P/E of 48.71 and a forward P/E of 14.76. Plains Exploration and Production has a profit margin of 6.69% and an operating margin of 18.72%, and sports a beta of 1.27.
Chesapeake Energy Corporation (CHK): Chesapeake Energy Corporation focuses on developing conventional and unconventional natural gas reserves onshore in the U.S. Carl Icahn was also a buyer during the most recent reporting period. The company sports a beta of 1.33, a trailing P/E of 13.35, and a forward P/E of 11.22. Profit and operating margins currently stand at 18.94% and 28.71%. Recently, BHP Billiton (BHP) paid $4.75 billion for Chesapeake Energy Corporation’s gas assets in the Fayetteville shale formation. Pickens has increased his holdings in Chesapeake Energy Corporation.
BP p.l.c. (BP): Pickens has added to his shares in BP, the international energy company, based in the United Kingdom, which provides fuel for transportation as well as energy for heat and light. BP p.l.c. is still recovering from the April 2010 oil spill, reporting profit and operating margins in the negatives at -1.25% and -4.58%, respectively. However, the company is set to acquire major interest in Companhia Nacional de Açúcar e Álcool (CNAA), which will be BP’s largest deal in alternative energy. BP has a forward P/E if 6.87 and sports a beta of 1.13. Click here to see the most recent updates on BP’s oil and gas drilling permits, which could significantly affect this stock’s price.
Halliburton (HAL): Lastly, Pickens has increased his holdings in Halliburton. Halliburton provides products and services for energy development, exploration and production. They currently sport a beta of 1.57, and Halliburton’s profit and operating margins stand at 10.21% and 16.69%. We think this stock could be affected if the situation in Libya escalates further. The company’s trailing P/E is 22.37 and their forward P/E is 12.99.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.