Q2 2008 Portfolio Moves: David Winters, T. Boone Pickens, Jim Puplava

The Wintergreen Fund, managed by David Winters, was fairly steady judging from its 13F filing. My spreadsheet is a little off as it seems some of the CUSP IDs were changed from last quarter so disregard the new positions shown in GLD & CNQ.

• Winters opened only 1 new position, eBay (EBAY). I’ve seen some investors (value and otherwise) tout EBAY based on their superior market position, but a user backlash against some of the new policies and charges they’ve implemented building momentum. I know a few friends who do quite a bit of selling on eBay who aren’t happy with the service. Amazon’s (AMZN) marketplace is quickly establishing itself for resellers, though eBay probably still has an advantage with collectible items. How this affects their prospects going forward, I don’t know. But in general, I’ve always had a hard time with tech stocks and especially, with the disconnect between their high cash flow levels but relatively low earnings.
• Not much else of note other than building a position in General Dynamics (GD) and unwinding some of his short bet against financials.

Boone Pickens shows some of the cards in his hand via BP Capital’s Q2 13F filing and he was pretty much doing nothing but buying. Some have mentioned the big drop in his portfolio’s value the past quarter but smart investors know that if you have a winning hand, you put more money in the pot.

• Pickens opened huge positions in 2 of my stocks, Chesapeake Energy (CHK) and Devon Energy (DVN). Welcome to the party. I haven’t heard him talk about these stocks but based on his touting of natural gas, I imagine that Pickens is attracted to the shale exposure of CHK and DVN as they are the biggest leaseholders in the Barnett, Haynesville and Marcellus shales.
• Judging from the activity, I guess Pickens is more of a dollar-cost averager as he basically added to most all his positions across the board, but with added emphasis on more energy plays: Halliburton (HAL), Suncor (SU), XTO Energy (XTO) and Weatherford (WFT).

Jim Puplava’s 13F filing isn’t necessarily the best place to get ideas. He manages a brokerage firm and probably taylors each account’s holdings to the holder’s situation. But he does a great deal of investing in the junior mining space and so it’s an easy way to get a list of vetted junior names for further research.

• Puplava’s biggest new position was Kinross Gold (KGC), which just announced a merger with Aurelian. I’ve looked briefly at KGC last summer but their stock price has hardly moved since then, despite the bull run in metals.
• Nothing else really jumps out at me. It looks like he’s been steadily accumulating shares in resource companies, much as he advocates on his show.

Click here for my rundown on Seth Klarman, Meryl Witmer and Marty Whitman Q2 2008 13F filings.

Or here for my take on the same on Bruce Berkowitz, Bob Rodriguez and Mohnish Pabrai.

You can also find all the Q2 08 13F filing spreadsheets here.

Comments

[redbaron:]

I follow T. Boone's picks religously, and own many of his picks, including the ones mentioned above. He is the only one I see who makes any sense at all on the subject of the energy crisis we are headed toward. Most of the others, including the Wall Street crowd, just don't get it yet. They will eventually, and that is when it will be time to sell.

2008 Aug 22 10:26 AM

[.StgMgr1:]

People in the water biz in Texas have told me that Pickens whole wind deal is a ploy.He wants a continous right-of way up the middle of the country to put in a pipeline to sell the massive amounts of WATER he owns or has options to buy. Also,he has said that he will put turbines on his neighbor ranches but not his own because they are "ugly".

2008 Aug 22 11:50 AM

[Ozarker:]

He's right they are ugly. The question is, do you want the money from the electricity they generate or the aesthetics of not having one? If I had a ranch in the middle of nowhere, I'd take the money and run.

2008 Aug 23 12:12 PM

[Steven Ward:]

Hey guys, I got an idea: why don't we find out if Picken's is sincere on the "Wind to Energy" idea or just an elaborate ploy for water sales. Which if true is brilliant.

Write your Congressman, US Senator, tell them we should build a pipeline from the Grat Lakes to the Mid continent Prairie to ensure wheat and corn productiion due to changing weather patterns.

Then see what happens. A movement could be started.

2008 Aug 23 12:37 PM

[lizardop:]

Pickens Plan is to make $ for Pickens- Today's WSJ explains how the increase in wind farms will improve gas demand and thereby increase market values for Pickens portfolio holdings such as DVN, CHK, etc... Please see below article:
BUSINESS EUROPE




Wind Fuels Gas
By EDGAR GÄRTNER
September 11, 2008

Following Russia's invasion of Georgia, a vital link between Europe and the energy resources of Central Asia, energy security is back at the top of Europe's agenda. For years now, many Europeans thought that a major part of their future energy security might come from wind turbines and solar panels. Industry, too, has suggested that this may be the case: At this summer's World Petroleum Congress in Madrid, most major oil and gas companies presented new plans for big renewable energy projects. But this renewables push, particularly when it comes to wind, is probably just a very clever short-term business strategy that will not improve Europe's geopolitical situation.

Wind turbines generate electricity very irregularly, because the wind itself is inconsistent. Therefore wind turbines always need backup power from fossil fuels to keep the electricity grid in balance. Gas turbines are the best way to do this. They are able to respond quickly and push power production when wind generators stop suddenly. They can be turned on and off almost instantly, whereas traditional coal-fired plants need to be maintained in a very inefficient standby mode if they are to respond to large fluctuations in power demand.

A proliferation of windmills, then, can become a windfall for gas sellers. Just look at the cases of Spain and Germany, Europe's leading producers of wind power.

By the end of 2007 Spain had 14,700 megawatts (MW) of installed wind capacity, according to Enagás, which manages the national gas network, producing 8.7% of the country's total power supplies. Most of these wind generators are located in scarcely populated areas, while the power consumption is concentrated in big cities with their many air-conditioned buildings. The peak load of the Spanish power grid is thus in the hot summer months—but this is precisely the time of year when there usually isn't much wind.

For this reason, more and more gas turbines are being installed near consumers in the suburbs of Spain's cities. Only last year, Spanish power providers added 6,400 MW of gas-turbine power capacity, taking the total installed capacity of gas turbines to 21,000 MW. Natural gas has become the main source of electricity generation in Spain, and according to Enagás, 99.8% of the gas used in Spain is imported. Most of this comes via pipeline from Algeria, but the import of liquid natural gas (LNG) by ships will increase.

In Germany, more than 20,000 wind turbines with a total capacity of 21,400 MW are now "embellishing" landscapes. Wind power's share of total electricity generation has risen in line with that of natural gas since 1990. Germany's gas consumption for power generation more than doubled between 1990 and 2007, and now represents 11.7% of the country's total power generation. The country imported 83% of its natural gas supplies.

Today part of the wind power backup in Germany is still done by old coal-fired plants. But the Greens and even parts of the governing Christian and Social Democratic parties are fervently opposed to the construction of new coal plants. So many old power stations will probably be replaced by gas turbines. The green opponents of new coal-fired plants are nowadays the most dependable allies of the big gas companies such as Gazprom, Shell or BP.

Most European countries force consumers to subsidize electricity from wind power. This makes "renewables" a very safe investment compared with other energy businesses, where swings in commodity prices can be large. As Europe's big integrated oil and gas companies—such as Shell, BP and Total—invest more and more in LNG, they are also lobbying hard for a world-wide carbon-emissions trading system that would further increase the advantage of gas over coal.

In the U.S. the same thing is happening. The problem for the natural gas industry in the U.S. is that gas is still relatively inexpensive compared with market prices elsewhere in the world. There are no facilities for LNG export. This may explain why Shell, BP, Chevron and T. Boone Pickens are investing in wind power. It's a clever strategy to add value to their gas assets by boosting demand.

These gas players can afford to lose money on wind power in the short term to reap huge profits in the long term. In fact, this was the strategy first implemented by Ken Lay of Enron in 1990s. Enron was the power and gas company that started the first large-scale manufacturing of wind power in the U.S. It also brought up the ideas for a cap-and-trade system, to increase the competitive edge of gas over coal.

Wind power is clearly not reducing the dependence on imported fuel, contrary to the frequent claims of its proponents. In fact the experience from Germany and Spain shows that it is increasing the dependence of imported natural gas. And that's not energy security.

Mr. Gärtner is a specialized writer on energy and chemicals issues based in Frankfurt.

See all of today's editorials and op-eds, plus video commentary, on Opinion Journal.

2008 Sep 11 07:15 PM

[lizardop:]

Oh, and lets not forget Pickens $44 million+ investment in CVX, good old Chevron! Now that's an ulterior motive if I ever saw one.

2008 Sep 11 07:18 PM