Boone Pickens' BP Capital Funds Down Big ~ market folly

Wednesday, September 24, 2008

Boone Pickens' BP Capital Funds Down Big

If you are unfamiliar with T. Boone Pickens, he is an energy maverick and his fund returned 300% in 2005. He is a big advocate of Peak Oil Theory and runs an energy-centric hedge fund (BP Capital) based in Dallas, Texas. His energy stock fund has a compounded annual return of 37% over seven years. Although he typically holds numerous positions in oil, he is also big on alternative energy (except ethanol) and has numerous holdings there as well. He most recently advocated a large natural gas position and has additionally made a big bet on wind energy. Some of his thoughts can be seen here from one of my posts. And, if you live under a rock, he's pushing for energy independence with his Pickens Plan.

But, it seems as if the maverick himself has had a rough last few months. We already knew that BP Capital had a rough July, where he was down almost 35%. And, it gets even worse. His hedge fund that focuses on energy stocks is down 30% through August. Additionally, his commodity fund is down 84% and is a poster child of leverage gone bad. (His commodity fund relies heavily on leverage, hence the larger losses). Ouch. All things considered, he has lost around $1 billion this year, $270 million of which is his own money.

Pickens said,

"It's my toughest run in 10 years.... We missed the turn in the market, there's nothing fun about it. I'm not willing to accept that [the downturn] was due to a global slowdown. When there's deleveraging in markets it will affect everything."

Additionally, he thinks oil prices will climb again due to oil demand outpacing supply and will maintain this view until he sees evidence of a true global slowdown. But, in a cautious move, he has shifted his portfolios to a more neutral stance. Curious as to what BP Capital had in their portfolio that was causing them so much pain? Well, then check out my analysis of their most recent portfolio holdings, found in their latest 13f filing. We'll have to see if ole Boone can turn his ship around in the next few months.

Source: WSJ

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