Analyzing Billionaire T. Boone Pickens' Top Holdings

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Includes: BP, CHK, DVN, EOG, MMR, NOV, XOM
by: The Analyst Hub

Billionaire T. Boone Pickens is one of the most well-known investors in the energy space. He has years of experience in the oil and gas industry, and founded his investment fund BP Capital in 1997. Here's a list of top holdings of BP Capital Management from the last quarter.

Stock

Symbol

Shares Held - 06/30/2011

Shares Held - 09/30/2011

Change in shares

Chesapeake Energy Corporation

CHK

1034284

570055

-464229

BP Plc

BP

583062

402111

-180951

Mcmoran Exploration Co.

MMR

1130833

1096134

-34699

National Oilwell Varco Inc.

NOV

208040

179462

-28578

Devon Energy Corporation

DVN

0

140006

140006

EOG Resources Inc.

EOG

193006

106458

-86548

Exxon Mobil Corp.

XOM

0

94310

94310

Source: 13F filing

My favourite long candidate among the above stocks is BP Plc. BP Plc. is an international oil and gas company. BP operates its products in more than 80 countries, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products. The Company operates two segments: Exploration and Production and Refining and Marketing. BP's EPS forecast for the current year is $7.65 and next year is $8.54. According to consensus estimates, its top line is expected to grow 4.60% in the current year and 6.30% next year.

The Gulf of Mexico spill in 2010 and the proposed Russian Arctic this year has clearly weighed on BP shares YTD. BP is currently trading at 6.32x forward PE and I believe most of the negatives are already priced in at these levels. Going forward I believe risk-rewards are skewed toward the upside. Given BP’s diverse oil and gas portfolio and financial flexibility, I believe it can easily weather any reasonable cost estimates for the spill.

One company that I would like to avoid from the above list is Exxon Mobil. Exxon is the second most gas-focused among the major companies in the sector. It is next only to Royal Dutch Shell (RDS.A) with 48% of its current production from natural gas, compared with 42% of the global majors.

Although globally natural gas prices are strong, they have lagged oil prices in the US. Thus, Exxon, which is overexposed to gas, is definitely not in a sweet spot. Although Exxon’s management is positive that US natural gas prices will catch up with the global prices eventually, I don’t see this happening in near to medium term.

Since the start of 2010, U.S. natural gas production has climbed by an average of 0.4 Bcf/day per month. With macro uncertainty and talks of another recession, I don’t see any factor that can cause supply demand tightness in the US natural gas market.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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