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T. Boone Pickens has a mixed record as a hedge fund manager. His fund averaged returns of about 38% per year through mid-2007 since starting in August 2001. However, he got caught off-guard in 2008 and lost 64%. Perhaps he isn't the type of investor who can time the market, but his experience in the oil industry is unique. If you are bullish about energy stocks, you should take a look at what Boone Pickens is betting on. We know that the energy industry is cyclical but we are long term bullish about energy stocks. That's why we went through the changes in Pickens' portfolio.

According to Pickens’ 13F portfolio, his top positions are Chesapeake (CHK), BP Plc (BP), McMoran Exploration (MMR), National Oilwell Varco (NOV), Devon Energy (DVN) and EOG Resources (EOG).

BP Capital reported owning $7.76 million worth of Devon Energy Corp (DVN) at the end of September. BP sold out its DVN position in the second quarter but it included the stock in the portfolio again. Devon is an independent energy company engaged in exploration, development and production of natural gas and oil. The company reported $3.5 billion revenue for the third quarter of 2011, up from $2.4 billion for the same quarter last year. DVN returned 20.63% since the end of September. Ric Dillon and Jean-Marie Eveillard both had over $200 million invested in DVN stocks.

BP Capital also opened a new position in Exxon Mobil Corp (XOM). In the third quarter, BP Capital initiated a brand new $6.85 million of XOM stocks. Exxon Mobil is a manufacturer and marketer of commodity petrochemicals. It reported revenue of $120.5 billion for the third quarter of 2011, up from $92.4 billion for the same quarter a year ago. Net income was $10.3 billion, compared with $7.4 billion last year. XOM returned 9.36% since the end of September. Ken Fisher had $584 million invested in XOM.

Over the third quarter, BP Capital sold out Noble Corporation (NE), an offshore drilling contractor for the oil and gas industry. BP Capital had $26.5 million invested in NE at the end of June. The company reported third quarter revenue of $737.89 million, compared with $611.98 million a year ago. Net income was $135.32 million, compared with $86.02 million last year. NE returned 26.96% since the end of September.

In addition to NE, BP Capital also sold out $22 million worth of Plains Explorations & Production Company (PXP), an independent oil and gas company engaged in the upstream oil and gas business. For the three months ending September 30, 2011, Plans Explorations & Production reported net loss of $88.30 million, compared with net income of $18.85 million for the same period last year. However, its stock returned 58.48% since the end of September.

BP Capital also sold out its $18.4 million position in Apache Corp (APA), $11.9 million position in Murphy Oil Corp (MUR), $11.5 million position in Hess Corp (HES), and $2.3 million position in Approach Resources Inc (AREX) during the third quarter. These four positions had a weighted average of return of 28.6% since the end of September, compared with 10.88% for SPY. It seems like Pickens reduced his bullish bets at the wrong time. Nevertheless, we are bullish about energy stocks because they provide some inflation protection at a time when central banks are flooding the market with cheap money.

Source: Eyeing Billionaire T. Boone Pickens' Q3 Portfolio Moves