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T. Boone Pickens, the billionaire chairman of BP Capital LLC, is lobbying for a congressional bill that will provide incentives to trucking companies that switch to 18-wheelers that run on natural gas instead of oil. The bill will also provide incentives to natural gas fueling station owners. Pickens says the plan will create jobs and reduce our dependence on foreign oil.

He will definitely benefit financially if the bill passes. He owns 41% of Clean Energy Fuels Corp. (CLNE), a leading company that builds natural gas fueling stations. SAC Capital, D.E. Shaw and Peninsula Capital also are investors in CLNE. Pickens also has several natural gas-related stocks in his hedge fund, BP Capital. He also personally owns shale acreage. “I’m in two big shale plays and one of them is the Marcellus. I got in under what I’ve seen some of them sell for, $5,000 or $10,000 an acre, and I didn’t pay anything like that. But I haven’t sold anything,” Pickens said in a recent interview.

Investors can buy CLNE or any of the following stocks that Pickens has in his 13F portfolio in order to benefit from an increase in natural gas and energy prices:

CompanyName

Ticker

Value

Activity

A B B LTD

ABB

2700

-2%

APACHE CORP

APA

20109

-8%

APPROACH RESOURCES INC

AREX

3434

-22%

CANADIAN NATURAL RES

CNQ

14607

-22%

MURPHY OIL CORP

MUR

13685

-16%

NOBLE CORP BAAR

NE

31674

-22%

OCCIDENTAL PETROLEUM

OXY

12871

-9%

SANDRIDGE ENERGY INC

SD

24783

-12%

EOG RESOURCES INC

EOG

23572

-16%

DAWSON GEOPHYSICAL CO

DWSN

11507

-9%

CHESAPEAKE ENERGY CORP

CHK

29610

2%

HALLIBURTON COMPANY

HAL

13419

6%

OCEANEERING INTL

OII

13552

-8%

GASTAR EXPLORATION LTD

GST

6023

-8%

B P PLC

BP

26677

0%

NATIONAL OILWELL V

NOV

13317

-1%

SUNCOR ENERGY INC NEW

SU

16058

-18%

DEVON ENERGY

DVN

13620

-18%

PLAINS EXPLORATION & PROD

PXP

21890

3%

WEATHERFORD INTL LTD

WFT

22043

-8%

MCMORAN EXPLORATION CO

MMR

20750

-10%

A123 SYSTEMS INC

AONE

2955

-30%

CONSOL ENERGY INC

CNX

0

-7%

DYNEGY INC DEL

DYN

0

-5%

Q E P RESOURCES INC

QEP

0

5%

CLAYTON WILLIAMS ENERGY

CWEI

0

-40%

TRANSATLANTIC PETROLEUM

TAT

0

-59%

Pickens sold his entire stake in Consol Energy (CNX), Dynegy (DYN), QEP Resources (QEP), Clayton Williams Energy (CWEI) and Transatlantic Petroleum (TAT). These stocks lost an average of 21% since the end of first quarter. Pickens clearly knows when to sell. Unfortunately the energy sector overall didn’t perform well since the end of first quarter and this creates an opportunity for investors to buy at bargain prices.

Investors can replicate Pickens’ stock picks at a 9% discount compared to the prices at the end of first quarter. The stock market also declined by nearly 5% since then, so these stocks are cheaper relative to the market. Pickens’ biggest position was in Noble Corp (NE). Pickens doubled his stake in Noble during the first quarter of 2011. The stock gained 0.4% so far in 2011. Glenn Dubin’s Highbridge Capital and Robert Rodriguez’s First Pacific had large positions in NE at the end of December (See Robert Rodriguez’s top stock picks).

Pickens’ second largest position in his portfolio is Chesapeake Energy (CHK). He didn’t buy or sell any shares in CHK during the first quarter. The stock gained 2% since the end of first quarter. It is also one of the top performing stocks this year with a 32.5% return. Robert Pohly’s Samlyn Capital and Curtis Macnguyen’s Ivory Capital had large positions in CHK as well.

Pickens’ third largest position, which he boosted his stake by 18% during the first quarter, is British Petroleum (BP). BP gained 0.6% since the beginning of this year. Ken Garschina’s Mason Capital, David Einhorn’s Greenlight Capital and Whitney Tilson’s T2 Partners also have large BP bets.

We like natural gas stocks and believe that natural gas will play a bigger role in our economy. We also like Boone Pickens’ stock picks and have CHK in our portfolio as well.

Source: T. Boone Pickens' Favorite Stock Picks