T. Boone Pickens: 3 Recent Sell-Offs and 4 Big Buys

Includes: APA, CNQ, DYN, MUR, NE, QEP, TAT
by: Efsinvestment

T. Boone Pickens is the chairman of BP Capital. He is ranked #879 in the Forbes Billionaires list, and #290 in the Forbes 400. His estimated current worth is $1.4 billion.

He has spent about $70 million so far in order to achieve his “Picken’s Plan” ---an energy plan which counts on wind and natural gas in order to lower United States’ addiction to oil. While this plan sounds too ambitious, he already made significant investments in alternative energy. In fact, his portfolio is almost pure energy [94.72%] based. His recent transactions show that he is getting more defensive in the oil stocks, selling the high-fliers, and buying the safer stocks with lower P/E ratios. Here, is a brief analysis of his latest three big sell-offs and four big buys (data from finviz, and current as of June 8 close):


QEP Resources (QEP): QEP raised Q1 of 2011 adjusted EBITDA, having a 14% increase compared to Q1 of 2010. As of June 8 close, the Colorado-based company had a market capital of $7.06 billion, P/E ratio of 25.61, and forward P/E ratio of 19.11. Although QEP had a negative EPS growth in the last five years, earnings increased by 32.24% this year. Moreover, analysts estimate a 44.14% EPS growth for the company next year. Gross margin is 65.85%, and profit margin is 12.4%. QEP paid a 0.2% dividend last year.

Debts keep increasing for the last four quarters. Boone Pickens closed his stake in QEP. While analysts give a 1.8 recommendation for the company (1=Buy,5=Sell), Pickens seems to think different. Given the cheaper alternatives, I would not buy it either. Recent dividend history is as follows:

May 25, 2011


Mar 9, 2011


Nov 23, 2010


Aug 18, 2010


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Dynegy Inc. (DYN): Dynegy reported its fourth quarter of loss in a row. As of June 8th, the Texas-based company owned a $732.87 million. P/S is 0.4 and P/B is 0.3.

DYN has a negative profit margin of -23.15%. ROA is -4.29%, and ROE is -15.8%. Earnings decreased by 153.47% this quarter while analysts estimate a -0.7% EPS growth for the next year. Insiders reduced their holdings by 29.11% in the last 6 months. Obviously, the minor momentum gained seems to have long gone, therefore, Pickens made a bull’s eye. He sold his stakes in the company

TransAtlantic Petroleum (TAT): TransAtlantic recently bought Thrace Basin Natural Gas (TBNG). The Texas-based company had a market capitalization of $699 million and a forward P/E ratio of 28.86 as of June 8 close. Analysts expect the company to have a 81.8% EPS growth next year.

On the other hand, the company has a negative profit margin. ROA is -20.65, while ROE is -30.80%. SMA50 and SMA200 ratios are -21.16% and -32.43%, respectively. Earnings decreased by -77.29% this quarter. Debts had an increase of more than 1100% during the last five quarters. No wonder, why Pickens sold out all his holdings in TAT. Selling is the best for now.

Big Buys:

Apache Corp. (APA): APA is planning to sell some of its liquefied natural gas exports to Asian utilities. As of June 8, Apache had a market cap of $45.82 billion, trailing ratio of 12.88, and forward P/E ratio of 9.07. Apache had a splendid EPS growth of 1072.43% EPS growth this year. Operating margin is 44.4%, while the profit margin is 25.94%. The company paid a 0.5% dividend in 2010.

Although debts nearly doubled over the last four years, the company seems to know how to fight in this arena. APA can be a real profitable long-term investment. Pickens opened a new stake in Apache, buying over 153.600 shares worth over $18 million. I think Apache is a safe investment in energy business. Following are the recent dividend payments of APA per share:

Apr 19, 2011


Jan 19, 2011


Oct 20, 2010


Jul 20, 2010


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Noble Corp. (NE): NE is suing Marathon (MRO) over a cancelled deal which was worth $752 million. As of June 8, the Switzerland-based company had a P/E of 22.11, and forward P/E of 9.97. Although earnings decreased by 53.01% this year, analysts expect the company to have a 94.61% EPS growth next year. Profit margin in 2010 was 17.96%, while the company yielded a 1.37% dividend.

Debts are increasing sharply, as well as assets. The debt/asset ratio is more or less stabilized. Dahlman Rose, UBS, and Stifel Nicolaus recommend buying NE shares. NE seems to have left its rough times behind, sailing to an enjoyable future. It’s a wise pick when going long. Pickens increased his holdings in Noble by 106.64%. Recent dividend payments are:

Canadian Natural Resources (CNQ): CNQ has recently suffered a forest fire near Fort McMurray, which impacted current production and operations of the company. CNQ, as of June 8, had a market capital of $45.07 billion, and forward P/E ratio of 10.96. Earnings increased by 44.53% while analysts expect the company to have a 64.8% EPS growth next year. The company paid a dividend of 0.9%, while the profit margin was 7.8%.

Assets and debts are on track. Target price is 55.01, implying an about 37% increase. I think the expectations are too high. I would not really invest in CNQ, but if you are interested, you can buy it for a price lower than what Pickens paid for. Pickens opened a new stake in CNQ at $40-$50 range. Recent dividend history is as follows:

Mar 16, 2011


Dec 15, 2010


Sep 15, 2010


Jun 9, 2010


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Murphy Oil Corp. (MUR): Murphy has high expectations on Eagle Ford Shale to increase its production by half within 5 years. The Arkansas-based oil company had $12.56 billion of market cap, a 13.7 P/E ratio, and a 8.43 forward P/E ratio as of June 8. Earnings increased by 79.06% this quarter. Murphy had a 1.69% yield, and profit margin was 3.6% last year.

Pickens increased his MUR holdings by 283.85%, buying over 137.000 shares worth $9.271.051. Although debts are unstable for the last four years, assets did not face a struggle. Murphy shares multiple topped recently. The overall look of the company gives an optimistic view, and MUR should not be ignored. It is a company capable of beating the market. Recent dividend payments of Murphy per share are:

May 11, 2011


Feb 11, 2011


Nov 9, 2010


Aug 12, 2010


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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.