T. Boone Pickens’ Favorite Energy Stocks

BP CAPITALThough Thomas Boone Pickens, Jr. who goes by T. Boone, is known as a hard-charging Texan, he was actually born in Oklahoma, where his father leased rights to oil and minerals his mother ran the local Office of Price Administration, during World War II. Pickens went on to attend Texas A&M on a basketball scholarship and after losing the scholarship, transferred to Oklahoma A&M, from where in 1951, he graduated with a degree in geology. After graduation, Pickens worked for Phillips Petroleum for a few years before founding what would become Mesa Petroleum. Mesa eventually grew into one of the largest independent oil companies. Pickens led Mesa’s first major acquisition, the Hugoton Production Company followed by acquiring other oil and gas companies. It was his time at Mesa in the 1980s that garnered him a reputation as a corporate raider though a number of his deals fell through. Some of Pickens’ high profile deals included attempted buyouts of Gulf Oil, Phillips Petroleum, and Unocal. After his big deal for Gulf Oil, he found himself on the cover of Time Magazine in 1985. Pickens now serves as chairman of BP Capital Management and has an estimated current net worth of $1.4 billion.

In 2008, Pickens announced his own energy policy proposal: the Pickens Plan. Its goal is to reduce foreign energy dependency by bringing online alternatives to oil such as wind and solar. Regarding harnessing wind power, the Pickens Plan calls for the US to utilize what he terms the “wind corridor,” referring to the section of the midwest from north Texas through the Great Plains to the Canadian border, which he posited would generate new jobs and provide economic stimulus to the area. However, increasingly Pickens has been focusing less on the renewable energy front and more on the shift to natural gas to power the commercial transportation sector.

Top 10 Holdings:

Company Ticker Value ($000s) Activity
B P PLC BP 20,345 12%
ENCANA CORP ECA 18,392 New
NATIONAL OILWELL VARCO INC NOV 14,262 0%
DEVON ENERGY CORP NEW DVN 13,513 36%
TRANSOCEAN LTD RIG 13,068 47%
CHESAPEAKE ENERGY CORP CHK 11,563 -12%
WEATHERFORD INTL LTD NEW WFT 10,489 35%
SANDRIDGE ENERGY INC SD 9,250 0%
DAWSON GEOPHYSICAL CO DWSN 8,426 0%
SUNCOR ENERGY INC NEW SU 7,063 0%

Pickens stuck to his strong suit in energy with new picks Encana (ECA), Calpine (CPN), Exelon (EXC), Valero (VLO), and NRG Energy (NRG). He also added to BP Plc (NYSE:BP), Devon Energy (NYSE:DVN), RIG, and WFT. BP is not as attractive to us, having traded up to ~5.8x forward earnings, inline with peers Total SA (TOT) at ~5.7x and Marathon Oil (NYSE:MRO) at ~5.9x. Exxon (NYSE:XOM) and Chevron (NYSE:CVX) trade at slightly higher multiples, ~8.8x and ~7.2x, respectively, which we view as warranted given balance sheet strength, and diversity of revenue streams. BP is the most popular oil company among hedge funds, followed by Exxon Mobil. Value investor Seth Klarman had a $400+ million position in the stock at the end of the first quarter. Billionaires Ken Fisher and Ken Griffin are among the fund managers with large XOM positions. They both boosted their stakes in XOM during the first quarter (see Ken Fisher’s top stock picks).

Over the past couple of months there has been quite a sell-off in energy equities, and as we reevaluate the space, we are interested in companies that are scaling up and investing in shale. It’s a capital intensive business, but we believe this is becoming a major theme for oil producers. Based on that theory, we like Noble Energy (NBL), Occidental Petroleum (OXY), Devon Energy, and Pickens’ pick MRO. MRO may seem to be late to shale game, but on an EV/EBITDA basis, is cheaper than Hess (HES) and Murphy Oil (MUR). MRO has also been better about returning capital to shareholders. Kevin Bacon Moore is the top holder of MRO among the nearly 400 hedge fund managers we are tracking.

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 Click to see monthly returns in table format!

Lists

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

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!