Hedge Fund Tracking: Q3 Moves For Pickens, Winters And Witmer

by: Davy Bui

T. Boone Pickens' BP Capital is a bit of an anomaly in terms of money managers. As a value investor, I'm always interested in what the best value guys are doing but Pickens is an energy investor and I am also bullish long-term on the oil/gas sector due to the implications of peak oil. And from years of following his filings, it seems BP Capital pursues a momentum-based trading strategy. Unlike value investors who buy as prices go down, BP Capital's Q3 activity was nearly all selling as the firm raised an estimated $150M while only spending roughly $15M.

It's hard to read too much into Pickens' selling without more information behind the firm's trading strategy or circumstances. The selling could have been forced by investor withdrawals, after all. Nevertheless, it may be interesting to examine BP's sells to see what stocks the firm doesn't want to own:

  • Pickens completely exited positions in Apache (NYSE:APA), Approach Resources (NASDAQ:AREX), Hess Corp (NYSE:HES), Murphy Oil (NYSE:MUR), Plains Exploration and Production (NYSE:PXP) and Noble Corp (NYSE:NE).
  • Interestingly enough, Chesapeake Energy (NYSE:CHK) was the biggest reduced stake in the BP Capital portfolio with $12M of shares sold off, nearly double the next largest reductions in Weatherford (NYSE:WFT), BP Plc (NYSE:BP) and EOG Resources (NYSE:EOG). Perhaps Pickens has soured on Chesapeake and its management team, perhaps for the same reasons I've discussed previously. However, I am not ready to throw in the towel.
  • BP Capital did do a little buying in the quarter, opening two new positions in Exxon Mobil (NYSE:XOM) and Devon Energy (NYSE:DVN). I own both stocks in my portfolio and thus approve of these moves, obviously. I've discussed my bullishness on Devon in the past, including an analysis on why DVN is a better investment than CHK.
  • View all of Pickens' Q3 moves in a reader-friendly spreadsheet format here.

David Winters of the Wintergreen Fund practices his own version of value investing. He also delves into overseas markets as well so the Wintergreen 13F-HR SEC filing gives us an incomplete picture of his portfolio. But judging from the filing, he was a net buyer in the third quarter like most of the value investors I've surveyed. Wintergreen bought an estimated $60M in stock while selling about $44M:

  • Winters opened only one new position, buying $6M of the gold ETF (NYSEARCA:GLD). Like other managers previously surveyed such as Seth Klarman and David Einhorn, Winters is probably concerned about the poor state of government budgets in the western world.
  • The Wintergreen made an even bigger bet on the tobacco industry, increasing stakes in Philip Morris International (NYSE:PM) and Reynolds American (NYSE:RAI) by a combined $25M. Apparently, Winters likes them both equally as the stakes are roughly equivalent at $56M to $58M each. Wintergreen's other big add in the quarter was a 40% boost in Coca-Cola (NYSE:KO).
  • Winters raised money for these new buys by divesting stakes in General Dynamics (NYSE:GD) and Goldman Sachs (NYSE:GS). He did not reduce stakes in any other holdings.
  • View all of David Winters' Q3 moves in a reader-friendly spreadsheet format here.

Meryl Witmer is best known as a member of the Barron's Roundtable, where she holds court on markets alongside such luminaries as Bill Gross and Marc Faber. She also manages funds via Eagle Value Partners. And like most value investors she was definitely a buyer during the rough Q3 stretch, with a 10:1 buy vs sell ratio.

  • Eagle Value Partners added only one new position, Capital One Financial (NYSE:COF), but added big to positions in Macquarie Infrastructure (NYSE:MIC), Compass Minerals (NYSE:CMP) and Globe Specialty Metals (NASDAQ:GSM). Witmer is also active in overseas markets so there may be some new buys which are not disclosed via the SEC 13F filing.
  • Witmer sold out of Semgroup (NYSE:SEMG) and E*Trade Financial (NASDAQ:ETFC). She also reduced holdings of Innophos Holdings (NASDAQ:IPHS) and Black Diamond (NASDAQ:BDE).
  • View all of Meryl Witmer's Q3 moves in a reader-friendly spreadsheet format here.

Disclosure: I am long DVN, XOM, CHK.PD.