Born in 1928, the 85-year-old billionaire has amassed a fortune by investing in the industry he knows best: oil and gas.
He came from an oil and gas pedigree. His father worked as a landman leasing oil and mineral rights in Oklahoma. Pickens’ first job out of college was with Phillips Petroleum. He later worked as a wildcatter..JPG)
In 1956, he founded the company that would become Mesa Petroleum and helped it grow into one of the largest independent oil companies in the world.
During the 1980s, he became famous for his acquisition of other oil and gas companies, including Pioneer Petroleum and Gulf Oil. His newfound notoriety landed him on the cover of Time Magazine and prompted him to consider a presidential bid during the 1988 elections.
When it comes to investing in the U.S. oil and gas sector, one would be hard pressed to find a more knowledgeable or experienced person anywhere on the planet.
According to 13F filings, Pickens opened five new positions in oil and gas companies during this year’s first quarter.
Through his investment firm, BP Capital Management, Pickens opened positions in Apache Corporation (NYSE:APA), Tesoro Corporation (NYSE:TSO), Marathon Petroleum Corp (NYSE:MPC), Gulfport Energy Corporation (NASDAQ:GPOR) and Phillips 66 (NYSE:PSX).
As you might expect, these stocks have all done well this year. Gulfport has seen the biggest gains, up 28%. The only laggard of the bunch is Apache Corporation (NYSE:APA), up “only” 8%.
So, considering the big gains we’ve already seen in this sector, are any of these picks still a good investment at today’s prices?
While I strongly believe all five companies should remain on investors’ short list of stocks to watch, I think Phillips 66 (NYSE:PSX) offers the best value at today’s prices.
Phillips’ strength lies in the diversification of its assets. Although it is known primarily as a refiner, the company also owns interests in pipelines and chemical assets that help boost earnings and provide stability, and help to differentiate the company from its peers.
As part of a joint venture with Spectra Energy Corp. (NYSE:SE), Phillips owns a 50% interest in DCP Midstream Partners, LP (NYSE:DPM). DCP Midstream Partners, LP (NYSE:DPM) owns or operates 62 natural gas processing facilities and 12 NGL fractionation plants. And it services these facilities through its massive, 62,000 mile natural gas pipeline system.
Regular StreetAuthority readers are probably already familiar with our fondness for “irreplaceable” assets like pipelines. These assets are very difficult to replicate, which discourages competition and helps maximize profits. StreetAuthority expert Elliott Gue has recommended a number of these investments in his Top 10 Stocks newsletter. For example, subscribers who took his advice and bought Brookfield Infrastructure Partners L.P. (NYSE:BIP) are up more than 48% on the recommendation.
