BP Capital, founded by T. Boone Pickens, is a relatively small hedge fund that specializes in mainly energy stocks. Energy investments amount to 95% of BP Capital's portfolio. Pickens has a vast amount of business experience in the energy sector. Before founding Mesa Petroleum in 1956, he worked for Phillips Petroleum for several years. Pickens was the king of takeovers and acquisitions during the 1980s. After taking over the Hugoton production company, he led the acquisitions of Pioneer Petroleum and of Tenneco's mid-continent assets. In 2008, the billionaire hedge fund manager introduced the "Pickens Plan," hoping to reduce America's dependency on the OPEC cartel. A radical suggestion in the plan was to introduce a wind-power corridor from Texas to Canada. So far, the plan has not received much attention from the administration.
While Pickens has significant private investments in alternative energy, BP Capital is still bullish about oil. According to the latest filings of BP Capital submitted to I-Metrix Edgar-Online, Pickens made 2 new purchases, increased positions in 6 stocks, reduced positions in 18 stocks and sold out 4 stocks. I have examined his 5 big buys and 2 big sells from a fundamental perspective, adding my O-Metrix Grading System where possible:
Company Name | Ticker | Shares Held | % Change | % of Portfolio | O-Metrix Score* |
Schlumberger | 135,822 | NEW!!! | 3.92% | 4.54 | |
Hess | 154,254 | NEW!!! | 3.28% | 7.86 | |
Chesapeake Energy | 1,034,284 | 17% | 11.82% | 2.85 | |
National Oilwell | 208,040 | 24% | 5.07% | 4.63 | |
Weatherford Int. | 1,104,225 | 13% | 6.54% | 1.25 | |
Devon Energy | 0 | Sold Out | 0 | 3.70 | |
Oceaneering Int. | 0 | Sold Out | 0 | 4.12 |
* Data obtained from Finviz/Morningstar and is current as of Aug.24. Click here for more information on O-Metrix Grading System.
Schlumberger lost 18.84% in the last month and 9.08% in the last quarter. BP Capital initiated a new purchase of 135,822 stocks and invested 3.92% of its portfolio on Schlumberger. Although the stock was affected from the recent sell-offs, Schlumberger has been an outperformer, returning 41.11% in one year. Analysts have a mean target price of $112.23, implying almost 60% upside potential. As of the August 24th close, the stock is trading with a trailing P/E ratio of 18.78 and a forward P/E ratio of 13.96. Dividend yield is 1.31%. PEG ratio of 0.93 is below the norm of 1. Based on 20% EPS growth estimate, Schlumberger has an O-Metrix score of 4.54.
Hess lost 23.11% in the last month and 28.07% in the last quarter. BP Capital initiated a new purchase of 154,254 stocks and invested 3.28% of its portfolio on Hess Corporation. Similar to Schlumberger, although the stock was affected from the recent sell-offs, it has been an outperformer, returning 12% in one year. Analysts have a mean target price of $91.27, implying almost 65% upside potential. As of the August 24th close, the stock is trading with a low trailing P/E ratio of 6.84 and a forward P/E ratio of 7.2. Dividend yield is 0.71%. PEG ratio of 0.66 is well below the norm of 1. Based on 10.43% EPS growth estimate, Hess has an O-Metrix score of 7.86.
Chesapeake Energy, a Jim Cramer favorite, lost 11.52% in the last month and 2.33% in the last quarter. BP Capital increased its holdings by 17% and invested 11.82% of its portfolio on Chesapeake. The stock returned 52.35% in a year. Analysts have a mean target price of $40, implying about 35% upside potential. As of the August 24th close, the stock is trading with a high trailing P/E ratio of 27.19 and a low forward P/E ratio of 10.3. Current ratio of 0.55 and debt/equity ratio of 0.55 are red flags. Dividend yield is 1.16%. PEG ratio of 2.99 is well above the norm of 1. Based on 9.08% EPS growth estimate, Chesapeake has an O-Metrix score of 2.85.
National Oilwell lost 21.44% in the last month and 10.85% in the last quarter. BP Capital increased its holdings by 24% and invested 5.07% of its portfolio on National Oilwell. The stock returned 73.46% in a year. Analysts have a mean target price of $98, implying about 55% upside potential. As of the August 24th close, the stock is trading with a fair trailing P/E ratio of 15.70 and a low forward P/E ratio of 11.40. The company has no debt issues: Debt/equity ratio is 0.03. Dividend yield is 0.68%. PEG ratio of 1.31 is slightly above the norm of 1. Based on 11.97% EPS growth estimate, National Oilwell has an O-Metrix score of 4.63.
Weatherford International was among the worst picks of BP Capital. The stock lost 30.5% in the last month, and 20.54% in the last quarter. BP Capital increased its holdings by 13% and invested 6.54% of its portfolio on National Oilwell. The stock returned 4.2% in a year. Analysts have a mean target price of $27, implying about 80% upside potential. As of the August 24th close, the stock is trading with a high trailing P/E ratio of 67.96 and a low forward P/E ratio of 9.47. Debt/equity ratio of 0.75 is a red flag. Based on 20% EPS growth estimate, Weatherford International has an O-Metrix score of 1.25.
Devon Energy lost 21.66% in a month and 21.80% in a quarter. BP Capital sold out its Devon Energy holdings in the last quarter. Devon Energy is a highly profitable company with a gross margin of 82.65% and operating margin of 33.74%. Its trailing P/E ratio is 19.02 and forward P/E ratio is 8.49. Analysts have a mean target price of $101, implying almost 56% upside potential. Dividend yield is 1.05%. Based on 15% EPS growth estimate, Devon Energy has an O-Metrix score of 3.70.
Oceaneering International lost 11.18% in a month and 1.69% in a quarter. BP Capital sold out its Oceaneering holdings in the last quarter. Oceaneering has a gross margin of 23.01% and an operating margin of 14.97%. Its trailing P/E ratio is 20.64 and forward P/E ratio is 15.67. Analysts have a mean target price of $48.42, implying 26% upside potential. Dividend yield is 1.54%. Based on 12.55% EPS growth estimate, Oceaneering has an O-Metrix score of 4.12.
Find more information on O-Metrix Grading System here.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.