It's time to check in again with well-known takeover artist T. Boone Pickens.
In January, I highlighted a number of
Pickens' top positions. He recently submitted a filing with the
Securities and Exchange Commission
that details his new holdings, plus some positions he's sold out of. We track all the ins and outs of Pickens' portfolio on his
Pickens' top position is
, which has taken a beating. It's his biggest holding -- a $120 million position out of $915 million total in stock holdings -- and is down from $77 at the beginning of the year to a little less than $70 now. Suncor, despite its selloff, is owned by a quality roster of funds, including famous value investor
. Whitman's fund has been up an average 19% over the past three years.
It's important to note that Pickens more than made up for the pain caused by Suncor with his second-largest position,
, which has gone from $65 to $95 this year. Tesoro refines crude oil and manufactures gas, petroleum coke and asphalt, and the company has certainly benefited from the declining crack spread -- the spread between crude oil and gas prices.
As crude oil has come down in price, the inputs into Tesoro's refining process have become cheaper, even though the price of gas has not moved as much so far this year. The company trades at a phenomenally cheap 4 times cash flows and has a pristine balance sheet.
Another fund that I like to track that owns Tesoro shares is the
. The fund specializes in deep value positions, usually stocks trading below book value and at extremely low multiples over cash flows. The Al Frank fund has a five-year annualized return of 15%.
A key fact about Pickens is that he has proven to be prescient regarding the price of oil. He is a believer in "peak oil theory," the idea that the planet has already reached its peak oil-production capabilities and that all the oil supplies will become depleted fairly soon. Pickens' portfolio can be thought of as
In January when oil was at $50, he stated in a
Wall Street Journal
article that it would head back to $70, which it did this past week. In a speech from early March, Pickens said, "The world has been looked at. There's still oil to be found, but not in the quantities we've seen in the past. The big fields have been found, and the smaller fields, well, there's not enough of them to replenish the base." He predicted oil prices would rise this year to an average of about $70 per barrel.
One of Pickens' interesting new holdings is
. Among other things, Fluor helps build refineries and drilling sites for oil companies. It also does a lot of work for the U.S. government, with a focus on the Department of Energy and the Department of Homeland Security, and it participates in environmental restoration and management for the government.
The company has been around since 1912 and is here to stay, with a little over $400 million net cash in the bank and trading at just 13 times EBITDA (earnings before interest, taxes, depreciation and amortization).
Fluor stock is also owned by investment guru
. Stockpickr member
has created a portfolio that contains stocks he thinks will do well in a rate-cut environment, and that includes Fluor.
For the rest of Pickens' new positions, greatly increased positions and sold-out positions,
The Stockpickr Guide to Oil
In addition to Pickens, another big believer in peak oil theory is Peter Thiel, who runs
. His portfolio can also be viewed as a peak oil index. Thiel founded PayPal and sold it to
for $1.5 billion in 2002 before starting Clarium. In 2005, Clarium was honored as the global macro fund of the year by both
, two hedge fund trade magazines.
Click on the following links for more on oil:
- The Profunds Ultra Sector Oil & Gas ETF.
- Cramer's top five oil picks from his March 12 " Mad Money" TV show.
- The Oil Services HOLDRs (OIH) - Get Report components most correlated with crude oil.
- The top oil refineries.
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 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.
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