T. Boone Pickens Is Extremely Bullish About These 10 Stocks

T. Boone Pickens is an oilman turned fund manager. Instead of taking risks in the oil fields, Pickens now takes risks in financial markets. His investment strategyis quite straightforward. He forecasts the direction of energy markets and then makes outsized bets in mostly futures and derivatives markets. Depending on his call, he might go long or short. Since he makes directional bets, sometimes his losses are staggering. In 1997, he started a commodities fund which eventually lost 90% in less than 2 years.

BP CAPITAL

Katherine Burton profiled Boone Pickens in her book “Hedge Hunters”. Boone Pickens’ most memorable quote from the book is “Most of my ideas work, but the timing gets screwed up every once in a while”. Here is an excerpt from the book about Boone Pickens’ performance until 2008:

His energy stock hedge funds, which invest 90 percent in equities and 10 percent in commodities, averaged returns of about 38 percent a year through mid-2007 since starting in August 2001. His oil and gas commodities fund distributed about $2.8 billion to investors since he started it in 1997. About $1.6 billion of the $4.3 billion BP Capital manages is Pickens’s personal fortune. New clients pay a 1.75 percent management fee and 30 percent of any profit.”

Insider Monkey, your source for free insider tradingdata, analyzed Boone Pickens’ latest 13F filings. Pickens added 5 new companies (EOG, NOV, DYN, GST, and AONE) to his portfolio and increased his holdings in 5 more companies. Here is how they performed since the end of 2010:

Company Ticker Return Value (Millions)
CHESAPEAKE ENERGY CORP CHK 37.4% 23
BP PLC BP 10.7% 23
PLAINS EXPL& PRODTN CO PXP 21.9% 19
QEP RES INC QEP 8.9% 17
EOG RES INC EOG 23.1% 16
NATIONAL OILWELL VARCO INC NOV 18.3% 11
HALLIBURTON CO HAL 15.2% 11
DYNEGY INC DEL DYN 3.0% 8
GASTAR EXPL LTD GST 15.1% 5
A123 SYS INC AONE -0.6% 4

 

The value weighted return for these 10 stocks was 18.3% during the first two months of 2010, beating the SPY’s 5.9% return by a large margin. T. Boone Pickens got a big boost from the increase in energy prices. John Griffin’s Blue Ridge Capital, David Einhorn’s Greenlight Capital, and Whitney Tilson’s T2 Partnershave BP in their portfolios. Tilson is extremely bullish about BP. PXP is Steve Cohen’s one of three top picks. Carl Icahn made a bundle from his recent investments in CHK.

Boone Pickens’ portfolio performed spectacularly in 2011 too. The 23 stock portfolio returned 18% in 2011, beating the SPY by more than 12 percentage points. Here is how each stock performed:

Company Ticker Return Value (Millions)
CHESAPEAKE ENERGY CORP CHK 37.4% 23
BP PLC BP 10.7% 23
MCMORAN EXPLORATION CO MMR 2.1% 20
WEATHERFORD INTERNATIONAL LT WFT 6.1% 20
PLAINS EXPL& PRODTN CO PXP 21.9% 19
QEP RES INC QEP 8.9% 17
EOG RES INC EOG 23.1% 16
SANDRIDGE ENERGY INC SD 47.7% 14
SUNCOR ENERGY INC NEW SU 22.8% 14
NOBLE CORPORATION BAAR NE 25.4% 12
DEVON ENERGY CORP NEW DVN 16.5% 12
NATIONAL OILWELL VARCO INC NOV 18.3% 11
OCEANEERING INTL INC OII 13.6% 11
HALLIBURTON CO HAL 15.2% 11
DAWSON GEOPHYSICAL CO DWSN 56.5% 8
DYNEGY INC DEL DYN 3.0% 8
OCCIDENTAL PETE CORP DEL OXY 3.9% 7
TRANSATLANTIC PETROLEUM LTD TAT -2.1% 7
GASTAR EXPL LTD GST 15.1% 5
WILLIAMS CLAYTON ENERGY INC CWEI 26.3% 5
A123 SYS INC AONE -0.6% 4
CONSOL ENERGY INC CNX 4.3% 4
MURPHY OIL CORP MUR -1.0% 4

 

John Burbank’s Passport Capital is another hedge fund that is extremely bullish about energy companies. They have SU and SD in their portfolio, and these stocks returned an average of 35% since the beginning of this year.

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