Before Bill Gates and Warren Buffett, there were John D. Rockefeller and Andrew Carnegie. It's hard to imagine that, by 1900, these two men controlled most of the oil and steel in the world.
The wealth John D. Rockefeller left behind is still being managed and invested through the family office that he and his son set up,
Check out the Stockpickr portfolio and you'll see that the Rockefellers haven't left their oil roots behind. Rather, it's probably the most comprehensive oil-infused portfolio I've ever seen. The Rockefellers clearly believe in peak oil theory, and they are putting their money behind it full force.
For most of the second half of the 19th century, the U.S. controlled the oil markets even more tightly than Saudi Arabia, Nigeria, Norway, Iran and a few others combined do now. Places like Oil City, Titusville and Pithole -- all located in the state of Pennsylvania -- were awash in the stuff. Oil City was home to the headquarters of motor oil company Quaker State, which is now part of
Royal Dutch Shell
John D. Rockefeller created his fabulous wealth by controlling not only the production of oil, but also the distribution of it. He did this by maintaining control of the railroads and by marketing it through his Standard Oil Trust company.
Rockefeller was a one-man OPEC, with total pricing power over oil. In 1904, Standard Oil controlled 91% of oil production and 85% of oil product sales in the U.S. Think of OPEC owning not only most of the oil in the world but also every gas station, and you'll get the idea.
(On a related note, I'd like to know your opinions on where oil is headed, and whether you believe we're living in a world that is slowly going to run out of oil within the next 50 years. Reply to the question that follows by clicking on the "Answer Here" link.)
The U.S. government, in one of its anti-monopoly crusades, broke up Standard Oil in 1911. Pieces of it make up parts of familiar companies, such as
If the entire Standard Oil company was still together, the combined entity (and the wealth of the Rockefellers) would be over $1 trillion dollars. This, combined with the exodus of various Rockefellers who wanted to follow other pursuits such as philanthropy and politics -- such as Nelson Rockefeller, who became governor of New York and vice president of the United States under President Ford, and John D. Rockefeller IV, who is the Junior Senator from West Virginia -- diluted the Rockefeller wealth.
Even though it's far from the Bill Gates level, it remains substantial. Rockefeller Financial Services, the family investment trust, controls a portfolio worth $2.6 billion.
is one of the largest holdings of Rockefeller Financial Services. Weatherford provides equipment and services used by larger oil companies for the drilling and production of oil and natural gas wells. The company trades at just 10 times EBITDA (earnings before interest, taxes, depreciation and amortization) and has a forward price-to-earnings ratio of just 12. The company has been on a tear lately, and analysts are expecting more growth:
Weatherford is also owned by
, run by PayPal founder Peter Thiel -- another proponent of peak oil theory. In addition, the stock appears in Stockpickr portfolios
The Rockefellers and Bill Clinton have something in common. Clinton, until just recently, was a partner in Yucaipa Companies, the investment firm run by Ron Burkle. Clinton quit Yucaipa so that there wouldn't be any associations between Burkle and Hillary Clinton's campaign.
But both Yucaipa and Rockefeller own big positions in
, the oil company started 60 years ago by Armand Hammer. Go to the
to see the rest of the companies they own.
Occidental Petroleum, which trades for less than five times EBITDA despite being near a 52-week high and having massive operating margins of 41%, is also owned by super oil investor T. Boone Pickens. Check out
portfolio on Stockpickr.
To see the rest of the Rockefeller Financial Services holdings -- including oil companies such as former Standard Oil components Exxon Mobil, Chevron and British Petroleum, as well as some interesting oil-related mid-caps like
-- check out the
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
to send him an email.
TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.