T. Boone Pickens is not an average hedge fund manager. He is an insider of the oil industry, thanks to his decades of experience. Now, instead of taking risks in the oil fields, he takes risks in the financial markets. His BP Capital Management mainly focuses on investing in energy futures and stocks. His oil and gas commodities funds distributed nearly $2.8 billion to investors since starting in 1997. The top 10 positions in Pickens' 13F portfolio at the end of the third quarter returned 28% since the end of September, versus 15% for SPY in the same period. The calculation assumes that Pickens did not increase or reduce his positions in the 10 positions.
Below we compiled a list of the top 10 positions in the 13F portfolio of Pickens' BP Capital as of September 30, 2011.
Company Name | Ticker | Value | Return since Sep |
CHESAPEAKE ENERGY | (CHK) | 14565 | -11.62% |
BP PLC | (BP) | 14504 | 23.35% |
MCMORAN EXPLORATION | (MMR) | 10885 | 37.56% |
NATIONAL OILWELL VARCO | (NOV) | 9192 | 44.03% |
DEVON ENERGY | (DVN) | 7762 | 15.17% |
EOG RESOURCES INC | (EOG) | 7560 | 45.58% |
EXXON MOBIL CORP | (XOM) | 6850 | 17.84% |
SANDRIDGE ENERGY | (SD) | 6569 | 52.34% |
WEATHERFORD INTL | (WFT) | 6289 | 28.67% |
DAWSON GEOPHYSICAL | (DWSN) | 5784 | 68.79% |
The largest position in Pickens' portfolio at the end of the third quarter is Chesapeake Energy Corp . BP Capital had $15 million invested in CHK. However, CHK is the only stock on the list above that underperformed the market since the end of September. It lost 11.62% so far since September 30th, while the market was up 14.91% in the same period. Reportedly, Pickens reduced his position in CHK by 45% during the third quarter, limiting his losses to some extent. On the other hand, Israel Englander is not so lucky. His Millennium Management increased its CHK stakes by 165% to $35 million over the third quarter. CHK has a market cap of $15B and a P/E ratio of 12.14.
During the third quarter, Pickens initiated a brand new $6.9 million position in Exxon Mobil Corp . The stock has returned 17.84% so far since the end of the third quarter, beating the market by nearly 3 percentage points. The stock has a market cap of $408B and a low P/E ratio of 10.25. XOM is quite popular among hedge funds. There are 46 hedge funds with XOM positions at the end of September. Among them, Ken Fisher's Fisher Asset Management had the largest XOM position. The fund had $519 million invested in XOM shares at the end of the third quarter.
BP Plc , National Oilwell Varco Inc , EOG Resources Inc , Devon Energy Corporation , and Weatherford International Ltd also performed extremely well since September. Pickens' past experience in the oil industry is invaluable to a hedge fund focusing on energy sector. Nine out of his top ten positions outperformed the market since the end of September, and seven of them gained more than 20%. We believe that by focusing on the stock picks of Pickens, investors are more likely to beat the market in the long term.
Disclosure: I am long CHK.
