4 Short Ideas From Billionaire T. Boone Pickens

Includes: ABB, AONEQ, DVN, OII
by: Insider Monkey

T. Boone Pickens, the oilman turned hedge fund manager of BP Capital, sold out of four positions during the second quarter. While he could have been simply divesting his position in these companies, Pickens could have sold out of those positions in order to position his fund for a short sell later. In any case the sales indicate that Pickens expect these stocks to underperform his remaining long positions.

  1. ABB Ltd (NYSE:ABB) is involved in power and automation technology. Pickens had a $2.7 million position in ABB before he sold out in the second quarter. ABB had been a new position for Pickens. He just bought it in the first quarter. ABB is currently trading at $19.28, up from a 52-week low of $16.42 on October 3. The stock is down from its 52-week high of $26.90, which it hit on May 31. Over the last 12 months, the $44.63B market cap ABB has lost more than 10%.
    ABB is trading at 14.55 times its earnings and has an EPS of 1.33. It has a 3.50% dividend yield. Its closest competitor is Siemens AG (SI). The $90.51B market cap SI is roughly twice the size of ABB, but ABB has over 10 times the quarterly revenue growth, boasting 27.80% vs SI’s 2.40%. ABB is one of Ken Fisher’s favorite picks. His Fisher Asset Management fund owns more than $537 million in the company (see Ken Fisher’s top picks).
  2. A123 Systems Inc (AONE) develops, manufactures and sells battery systems, including lithium ion batteries. Pickens sold out of a $2.9 million position in AONE during the second quarter. AONE has been losing steadily since hitting a 52-week high of $10.77 on January 12. It fell to a 52-week low of $2.99 on August 8, 2011. It has lost more than 63% over the last 12 months.
    AONE’s biggest competitor is the $21.98B market cap Johnson Controls, Inc. (NYSE:JCI). AONE is just $432.28M, but it has much higher quarterly revenue growth at 60.80% compared to JCI’s 21.40%. D.E. Shaw is a fan. His fund has more than $5.5 million in the company after increasing its stake by 2942% during the second quarter (check out D.E. Shaw’s favorite positions).
  3. Devon Energy Corp (NYSE:DVN) is an independent energy company involved in oil and gas exploration. Pickens had $13.6 million in DVN before he sold out in the second quarter. It has lost 7.18% over the last year. DVN is a $25.63B market cap company. It is trading at $61.53, down from a 52-week high on March 22 of $93.56.DVN offers a 1.10% dividend yield and is currently trading at $61.23 a share, down from a 52-week high of $93.56. Analysts estimate that the stock will rise to $96.94 a share within the next 12 months.
    DVN’s closest competitor is $17.37B market cap Chesapeake Energy Corp (NYSE:CHK). CHK has a high quarterly revenue growth at 64.90% vs. DVN’s 28.20%, but DVN has much higher EBITDA at $5.70B, compared to CHK’s $3.45B. Ric Dillon’s Diamond Hill Capital is bullish about DVN, to the tune of $253 million (see Ric Dillon’s favorite stocks).
  4. Oceaneering International Inc (NYSE:OII) provides engineered products and services to offshore oil and gas companies. Pickens had more than $13.65 million in OII before selling out during the second quarter. OII has returned more than 62% over the last year It is currently trading at $42.36 a share, near its 52-week high of $46.19. It has a dividend yield of 1.40% and a market cap of $4.60B.
    OII’s closest competitor is Ensco Plc. (NYSE:ESV). ESV is the larger of the two at $10.87B, but OII has higher revenue, reporting $2.03B in revenue compared to ESV’s $1.76B. Ken Fisher is fan. His fund has more than $103 million invested in the company after increasing its position by 97% in the second quarter. Jim Simons’ Renaissance Technologies likes OII as well. His fund has more than $28 million in the company.

Disclosure: I am long CHK.