I fondly remember watching the TV series “Dallas” with my grandparents back in the early 1980s. The show featured a wheeler–dealer, oil tycoon character named J.R. Ewing. He was a man everybody loved to hate, but secretly respected for his business acumen.
Interestingly, J.R. Ewing has a real life twin. This man is either vilified or considered a hero depending on whom you ask. He strikes fear into the hearts of corporate board members who could lose their cushy jobs if their company becomes the victim of his next takeover. Others admire him for challenging big corporations and setting them on the path to shareholder profits.
If you haven’t guessed, I am talking about the famous corporate raider and oil tycoon T. Boone Pickens. Best known as a value-hunting fiend, the founder of Mesa Petroleum has accomplished many stunning achievements. Among his most famous deals is the 1981 takeover of Hugoton Production, an oil company that was 30 times larger than Mesa. Through many other headline-grabbing energy takeovers, Pickens has become a billionaire. Today, he chairs a $100 million hedge fund, BP Capital.
More recently, the insatiable value seeker has been an advocate of renewable energy. His 2008 energy policy proposal — the “Pickens Plan” — calls for a radical reduction on U.S. dependency on foreign oil. And although critics of the plan say this proposal is biased because Pickens is a heavy investor in wind and solar power, one thing is for certain: the man knows energy.
So when his hedge fund reports any transaction, a huge following of energy and value investors takenote. In the last quarter, Pickens reported three new buys and 10 sells in BP Captial’s stock portfolio.
Two of his recent transactions have caught my special attention. At their current valuation, they could easily provide investors with nice returns of at least 30% in the next year or so. Here they are…
1. Halliburton Company (NYSE:HAL)
Pickens bought more than 157,000 shares of Haliburton in the third quarter. Believe it or not, Pickens only recently added this Texas-based energy provider to his portfolio. Provided the size, reputation and market share, I would have expected Pickens to have owned the U.S. second-largest oil field provider for years. However, being the value-oriented investor he is, it makes perfect sense that he would wait until last quarter to buy into Haliburton. The stock had been pressured lower from its summer 2011 highs of $57 a share, because of slow drilling activity and a weak U.S.market, as you can see in the chart below.