In May, billionaire T. Boone Pickens’s BP Capital filed its 13F for the first quarter of 2013 with the SEC, disclosing many of its long equity positions as of the end of March, including Occidental Petroleum Corporation (NYSE:OXY), Apache Corporation (NYSE:APA) and more. Obviously the information in this filing is somewhat old by now, but we at Insider Monkey track quarterly 13F filings from hundreds of hedge funds, including BP, as part of our work researching investment strategies (for example, we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year). This allows us to identify stocks which Pickens has owned for the long term on the theory that he is more likely to still own these names. Read on for our thoughts on the three largest positions the fund owned in its most recent 13F which it also had at least $10 million invested in at the end of March 2011 or see the full list of Pickens’s stock picks over time.
The billionaire and his investment team reported a position of about 125,000 shares in Apache Corporation (NYSE:APA). Apache increased its energy production, in terms of barrels of oil equivalent, by 2% in its last quarterly report compared to the first quarter of 2012. Even though the company shifted its production mix away from natural gas towards oil, natural gas and natural gas liquids still made up a majority of output.
Recently, while oil prices have done well, natural gas prices in North America (the source of most of Apache’s production) have been low due to a number of factors including a glut in supply and a slowing in demand growth from utilities. As a result, revenue fell by 10% over this period and net income decreased at a similar rate. Over the long term, however, natural gas is thought of as a potential benefit as companies build out export infrastructure in the U.S. Apache is valued at only 9 times forward earnings estimates as Wall Street analysts expect an increase in earnings per share next year.
Pickens has been a long term owner of Devon Energy Corp (NYSE:DVN), another oil and gas exploration and production company which has been troubled recently by low natural gas prices. Devon’s 10-Q shows that it is even more focused on natural gas an NGLS than Apache is: oil (and Canadian bitumen) was responsible for only about a quarter of its energy production by energy equivalent in the first quarter of 2013.