Boone Pickens' BP Capital Funds Down Significantly

If you are unfamiliar with T. Boone Pickens, he is an energy maverick and his fund returned 300% in 2005. He is a big advocate of Peak Oil Theory and runs an energy-centric hedge fund (BP Capital) based in Dallas, Texas. His energy stock fund has a compounded annual return of 37% over seven years. Although he typically holds numerous positions in oil, he is also big on alternative energy (except ethanol) and has numerous holdings there as well. He most recently advocated a large natural gas position and has additionally made a big bet on wind energy. Some of his thoughts can be found  here. And, if you live under a rock, he's pushing for energy independence with his Pickens Plan.

But, it seems as if the maverick himself has had a rough last few months. We already knew that BP Capital had a rough July, where he was down almost 35%. And, it gets even worse. His hedge fund that focuses on energy stocks is down 30% through August. Additionally, his commodity fund is down 84% and is a poster child of leverage gone bad. (His commodity fund relies heavily on leverage, hence the larger losses). Ouch. All things considered, he has lost around $1 billion this year, $270 million of which is his own money.

Pickens said,

It's my toughest run in 10 years.... We missed the turn in the market, there's nothing fun about it. I'm not willing to accept that [the downturn] was due to a global slowdown. When there's deleveraging in markets it will affect everything.

He also thinks oil prices will climb again due to oil demand outpacing supply and will maintain this view until he sees evidence of a true global slowdown. But, in a cautious move, he has shifted his portfolios to a more neutral stance. If you're curious as to what BP Capital had in their portfolio that was causing them so much pain, check out my analysis of their most recent portfolio holdings, found in their latest 13F filing. We'll have to see if old Boone can turn his ship around in the next few months.

Source:

• WSJ 

Comments

[eddie6442:]

As I observe our governments efforts, or lack thereof, for dealing with our financial and energy crisis it becomes painfully obvious that America may have to hit bottom before having any real chance to advance. Regrettably, the power brokers in government, business and special interests act with a level of arrogance, which may be exceeded only by their level of ignorance as to the threats to our way of life. I can only imagine what other countries, friend and foe, are saying in private about Americas death spiral and apparent destination.........
........ the CRASH SITE!!!!!!!!!!
I don't recognize the country I knew for the past 60 years.

2008 Sep 25 08:14 AM

[Peter Cooper:]

Oil has followed the dollar's recovery and is now perking up as the dollar looks weak - a currency analyst could run this position better than a commodities analyst! The American bail-out package looks inflationary and dollar negative so that should keep oil prices up higher than might be expected in a recession. But I think the big money is in gold and silver not with Pickens and his hedge funds, see my website for more ideas on how to invest for maximum gains at lowest risk.

2008 Sep 25 08:21 AM

[cjwirth:]

All paper investments such as money market, money in the bank, stocks, bonds, pension plans, and even gold are only valuable if there is abundant oil. That black stinky stuff is the source of all wealth. Chris Shaw says it best: "Would you think me a jester if I said that the one true currency is energy? It always was and always will be. Economics is the game of Tiddlywinks that we can afford to play only in the midst of easy, abundant energy. Energy is the donut, economics is the hole." www.onlineopinion.com....
And read his other articles too, this man knows some stuff!
This means that Pickens won;t be worth a dime unless he puts some of those investments that will yield some real food in the future. I know some stuff too, and did some hard research, and it is all free for the pickins :), if you catch my drift. Hey Pickens and you-all, give me a call and I'll try to give you some advice. 603-668-4207 www.peakoilassociates....
survivingpeakoil.blogs.../

2008 Sep 25 08:28 AM

[cjwirth:]

All paper investments such as money market, money in the bank, stocks, bonds, pension plans, and even gold are only valuable if there is abundant oil. That black stinky stuff is the source of all wealth. Chris Shaw says it best: "Would you think me a jester if I said that the one true currency is energy? It always was and always will be. Economics is the game of Tiddlywinks that we can afford to play only in the midst of easy, abundant energy. Energy is the donut, economics is the hole." www.onlineopinion.com....
And read his other articles too, this man knows some stuff!
This means that Pickens won;t be worth a dime unless he puts some of those investments that will yield some real food in the future. I know some stuff too, and did some hard research, and it is all free for the pickins :), if you catch my drift. Hey Pickens and you-all, give me a call and I'll try to give you some advice. 603-668-4207 www.peakoilassociates....
survivingpeakoil.blogs.../

2008 Sep 25 08:29 AM

[Crude Oil T...:]

I think BP will be fine. Let's revisit this at the end of December and I suspect T. Boone will be up. Oil will not stay down, it just can't.

2008 Sep 25 08:41 AM

[billp37:]

We've been tracking PNM natural gas and electric integrated resource planning for over year.

We learned that that there is speculation based on collected data that fossil fuel production may have peaked many places.

Conventional natural gas production peaked in 2001 according to EIA.

We learned that twice as many natural gas wells are required to maintain the falling conventional natural gas production. Future hope is for nonconventional natural gas production, we learned.

PNM senior economic analyst Steve Martin, modeling and forcasting, showed a foil titled Peak Demand

home.comcast.net/~bpayne37/pnmelectric...

which identified New Construction as a primary source of electric load increase.

Limit new construction for energy reasons would likely cause a recession - if not a massive depression!

Let's see what happens to the price of oil, natural gas, and electricity by next June.

"PNM Wants 18% Hike - Jump Is on Top Of June Increase" the Albuquerque Journal reported on September 23, 2008.

As retirees we're into CDs, not commodity speculation. But it is fun to watch T Boone's natural gas and wind efforts ... and see how his funds do.

We are of the opinion that some of these markets may be rigged.

Those doing the rigging make lots of money. Others lose. Even Pickens.

Remember the Amaranth natural gas negative spike to about $4.

What caused this negative spike? Market manipulation?

2008 Sep 25 03:48 PM

[toomuchgas:]

The gloom and doom we are hearing is the worst I've heard for decades. Looking at my stocks, none have cut their dividends, several have raised them. Market gurus including Cramer are saying sell. People are taking their money out of money market funds and putting it under the mattress. It feels like a major technical bottom so I'll hold and put new money into stocks, especially beaten up REITs.

2008 Sep 25 05:05 PM

[January Thaw:]

You can't have an economy without energy...but you have seen the divergence between the price of the commodity and the value of energy
stocks...so an energy company is dependent upon the economy ...
the whole set up is a snake swallowing its tale...Still I think come
winter...oil will go up...will we make any money with it??? That's the
$64,000 question.

2008 Sep 25 06:43 PM

[freshone:]

guess what ...the other countries like china and russia are laughing and loving the fact that we are just waiting for them to start buying our products in order to ressurect our economy...these markets are getting nuked and our government does nothing. this election and the politics associated are clouding any objective judgement these lousy polotitions have left...they blame wall street but there are plenty of people nation wide stupid enough to sign up for mortgages they could never ever afford... this is a main street problem as much as a wall street problem.

2008 Sep 26 12:34 PM

[bones33:]

The smart money is shorting everything in sight.Driving prices into the ground with the media acting as a catalyst.Things aren't as bad as the media purports.Eventually the shorts will have to cover but probably not until most small investors capitulate.My account has been reduced to about 25% of what I started with and that may be gone soon if the ignoramuses on Capitol hilldon't get it together.

2008 Sep 27 02:29 AM

[User 238404:]

Schlumberger (SLB) and Halliburton (HAL) operate worldwide and have fallen along with the price of oil, as if investors think demand and drilling will slow down significantly. But demand will continue to be strong for both oil and natural gas, and the drillers will have strong results. They don't need $145 oil, or even $100 oil to do well.

2008 Sep 28 02:16 PM

[Google Fan:]

User 238404 - could not agree more. I am a holder of Transocean (RIG), and in reading their financials, the only difference that the price of oil makes is a little less gravy on top of their record earnings. Some of their contracts are a fixed daily rate AND a premium on oil being over $80.00 a barrel. Some of those contracts were entered into in 2007 and will be effective until 2010 and beyond. So, until I see oil hit 80.00 I am not even going to blink. T Boone is no idiot, and has been through many recessions at his age. Nor are people in developing countries or the US going to stop driving any time soon. They can't afford an expensive hybrid, and will most likely continue to use their own car they have. Would you enter in to a new car loan in this environment, even if you could get a loan? Think it through, and then ask yourself, would you rather be in oil, cash, or retail in the long run?

2008 Sep 29 06:35 PM

[stive:]

Shocking statement from BP Capital Manager
tubedirect.net/index.p...
I Shocked! This is a must see everyone!

2008 Sep 30 10:10 AM

[stive:]

Shocking statement from BP Capital Manager
tubedirect.net/index.p...
I Shocked! This is a must see everyone!

2008 Sep 30 10:10 AM

[weiwentg:]

Stive, is your site attempting to have me download a virus?

I think a lot of the fast money is moving out of oil and natural gas related investments, but the fundamentals still exist for high prices in the long run, even with a global recession, conservation and alternative energy.

2008 Oct 11 04:30 PM