T. Boone Pickens is Bullish on Exxon Too, Also Loves Small-Cap Athlon Energy

After making billions in the oilfield, T. Boone Pickens began investing in the public markets (primarily in energy) and issues quarterly 13F filings through his fund BP Capital. Here are some things we noticed in BP Capital’s most recent 13F:

Exxon. Almost 90% of Pickens’ equity portfolio is invested in the energy sector, and on a quarterly basis, his turnover is fairly high. Still, it’s a surprise to see him bullish on a name he was bearish on last year. Pickens sold out of Exxon Mobil (NYSE:XOM) in the second quarter of 2012, and in the third quarter of 2013, he’s buying again. The hedge fund billionaire bought $6.4 million worth of the oil and gas giant, and it’s now the second largest stock position he owns. Shares are up 7% year-to-date, but they do pay a dividend yield near 3%.

T Boone Pickens with oil bin

Apache bull no more. Inversely, Pickens and BP Capital sold their entire stake in Apache Corporation (NYSE:APA), which had been their largest stock pick one quarter earlier. Apache is a shale play that has a variety of wells throughout the world, but it has missed the Street’s earnings estimates in five consecutive quarters as costs have been higher than they’d like.

Geopolitical risks, particularly in Egypt, are also a risk factor here, but in Pickens’ place, it’s worth noting that BP isn’t exactly growing its capital base by leaps and bounds. In other words, he appears to have found a better place to park his assets in the energy sector, and that’s why he sold Apache, rather than for some outright bearish reason. It’s worth noting that Pickens also sold out his stake in Whiting Petroleum (NYSE:WLL) last quarter, which is up 50% year-to-date, so profit-taking probably motivated that particular move.

Pioneer is the new top pick. Pioneer Natural Resources (NYSE:PXD), meanwhile, is Pickens’ new top pick, comprising 12.5% of his equity portfolio. The billionaire upped his stake in this U.S. oil and gas E&P by 35% last quarter, and profitability in the Eagle Ford Shale is a major reason why, in our opinion. Expanding liquids production is another reason why many investors are excited about Pioneer, in addition to its Spraberry play within the Permian Basin. Pioneer shares are up over 80% in 2013, and the valuation isn’t out of hand just yet because growth prospects remain strong.

Athlon is worth watching. Lastly, we should also mention Athlon Energy (NYSE:ATHL), which is a smaller-cap stock than most of Pickens and BP’s other picks. The independent E&P is exciting analysts with its Howard County (Texas) program, particularly as it looks to expand horizontally in the area. Production has generally beaten even the most bullish guidance in 2013, particularly due to heightened vertical well activity and quicker drilling.  Although free cash and debt levels are trending in the wrong direction, production is expected to grow by fourfold over the next three years, and at a PEG ratio near 0.5, investors simply haven’t noticed the growth potential here. Pickens owns nearly $5 million in Athlon, and it’s his sixth largest equity holding.

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