Billionaire T. Boone Pickens’ Latest Stock Picks Include Halliburton

T Boone PickensT. Boone Pickens became a billionaire through his operations in oil, and now manages a fund which primarily invests in energy. The long stock picks of BP Capital are reported in 13F filings six to seven weeks after the end of each quarter, and recently it filed the 13F for the third quarter of 2012. We have been going through these documents at various funds and picking out specific stocks and broader investment decisions that we think investors might fund interesting. Read on for our evaluation of some of Pickens’s investment themes and compare his activity to previous filings.

Halliburton. Pickens hadn’t owned any shares of Halliburton Company (NYSE:HAL) at the end of June, but had initiated a position of about 150,000 shares by the end of the third quarter. The equipment and services company looks cheap to us at 10 times earnings (on either a trailing or a forward basis) with the sell-side expecting enough growth over the next several years to generate a five-year PEG ratio of 0.6. The business has been struggling a bit, but when we had looked at its larger peer Schlumberger we had come to the conclusion that Halliburton was a better value play. Read more about why we think that Halliburton is a better buy than Schlumberger.

Valero. For the third quarter in a row, Pickens increased his stake in Valero Energy Corporation (NYSE:VLO) and it is now the largest position in his 13F portfolio. Valero is a refining and marketing company- little drilling exposure here- which produces gasoline, ethanol, and other fuels and compounds. At a market capitalization of over $16 billion, it trades at 15 times trailing earnings but Wall Street analysts expect strong growth in 2013 and so the forward P/E is only 6. Fellow billionaire Israel Englander’s Millennium Management had owned the stock during the second quarter of the year. However, earnings have been slipping and the company is therefore dependent on seeing a strong reversal in its business prospects.

Less drilling. Pickens cut his stake in Transocean LTD (NYSE:RIG), an offshore contract driller, in half; he also sold about half his shares of independent integrated oil company Mcmoran Exploration Co (NYSE:MMR); he sold out of oil major EnCana Corporation (NYSE:ECA), which had been one of his top ten holdings. It’s possible that he decided against these names in particular, but coupled with the addition to Valero our interpretation is that Pickens and his team are trying to move their dollars further downstream. Transocean actually seems to be in a decent place- its revenue was up in the third quarter from a year earlier, and the forward P/E of 9 suggests that analysts consider it a good value- so perhaps investors should be looking at that as a potential long. We’re more sour on the other two oil companies: sales at each were down over 30% during the same time frame. McMoRan is widely shorted, with 22% of the outstanding shares held short as of the most recent data, and traders might look to join that side of the market as the sell-side doesn’t expect it to be profitable this year or next year. Encana also looks high priced, at 28 times consensus earnings for 2013, though it has a high dividend yield. We think that we’d avoid it.

We’d note that supermajors Exxon Mobil, BP, and Chevron are absent from Pickens’ 13F entirely; it’s possible that this ties in to a negative attitude towards drilling. We’ve mentioned that we think that investors should be taking a look at Halliburton if they want to buy a good long-term energy stock. Valero would require considerably more review; certainly if it hits analyst targets it will prove undervalued at the current price, but that would require much better performance than what the company has done recently.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!