After becoming a billionaire through his success in the oilfields, T. Boone Pickens has moved into finance with his own hedge fund BP Capital (which manages a sizable portion of his own wealth). The fund, which concentrates on energy related investments, recently filed its 13F with the SEC, disclosing many of its long equity positions as of the end of March; see the full filing on the SEC’s website.
We track BP Capital’s filings in our database alongside those of hundreds of other funds as part of our work researching investment strategies (we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year) and so we can also check to see what Pickens and his team have been doing over time. Read on for our thoughts on their five largest holdings as of the end of March or compare these picks to previous filings.
BP Capital reported owning a little over 100,000 shares of Pioneer Natural Resources (NYSE:PXD), an oil and gas exploration and production company. A minority of Pioneer Natural Resources (NYSE:PXD)’s production by energy equivalent is oil, with the rest being natural gas and natural gas liquids (where market conditions have not been as good recently). As a result, earnings fell over 50% last quarter compared to the first quarter of 2012. This does give Pioneer Natural Resources (NYSE:PXD) some potential upside if natural gas prices recover, and it’s certainly possible that demand will rise, but analysts don’t seem optimistic on the company with the forward P/E being over 20.
Pickens initiated a position of about 120,000 shares in Apache Corporation (NYSE:APA), a global E&P company. The production mix here is also a little less than 50% oil in terms of energy equivalent, though oil does account for nearly 80% of production revenue due to the more favorable market conditions we’ve mentioned earlier. Both revenue and net income fell 10% in Apache’s most recent quarter compared to the same period in the previous year, though here the sell-side is forecasting a strong recovery: the stock trades at 9 times forward earnings estimates, in line with the valuation of many oil majors.
Best of the rest