BALTIMORE (Stockpickr) -- T. Boone Pickens is no stranger to scrutiny. The billionaire energy investor, who founded Mesa Petroleum in 1956 and BP Capital 40 years later, is most known to Main Street for his Pickens Plan, an energy plan that uses wind turbine farms to generate electricity, limiting the U.S.'s need for foreign oil.
Since he announced the plan in 2008, Pickens has spent millions promoting it to the U.S. public -- and has gained millions of supporters. But while most people focus on Pickens' politics, Wall Street's more concerned with his portfolio.
After all, his $163 million energy hedge fund, BP Capital, is one of the most well-known energy funds in the world, if only for its high profile founder. With major developments taking place in the energy space right now, it makes sense to follow smart money -- and in the energy world, that's T. Boone Pickens.
Here's a look at
There's no question that the biggest news item on investors' minds right now is the
in the Gulf of Mexico. The spill has had a serious environmental and financial impact on the region -- not to mention on key player
, no relation to BP Capital. But that hasn't stopped Pickens from adding one of the companies involved to his buy list.
has dealt with controversy before, but in the case of Deepwater Horizon, where Halliburton's team was charged with cementing the well, Congressional testimony is pointing the finger at BP's decision to ignore Halliburton's warnings about blowout dangers. While the specific details still won't be teased out for a while, Halliburton's share price has definitely taken a hit, falling more than 25% from late April highs.
Apparently that proved to be an attractive price point for T. Boone Pickens. BP Capital took a major stake in the company, which now makes up 5% of the fund's concentrated portfolio.
Not all of BP Capital's buys last quarter were controversial. The fund also took a big position in
, a major coal and gas producer that operates in Northern Appalachia. Consol has 16 highly efficient and long-held longwall coal mining complexes throughout the region, a factor that affords the company a high-BTU product at one of the beefiest profit margins in the industry.
In recent years, Consol has been pushing hard into the natural gas industry, spending $4.5 billion to take on two major asset bases, a strategic move that will give the company some protection from the cycles of the coal industry, as well as an interest in a growth market of the energy industry right now.
The company has historically generated stellar cash flows thanks to two factors: exceptional coal prices and exceptional mines, the latter of which are essentially impossible for competitors to replicate. As long as coal prices -- and now natural gas prices -- hold up in 2010, BP Capital's latest buy should be a good one.
Oilfield service provider
is another new position that T. Boone Pickens' fund initiated in the last quarter. As with Halliburton, this competitor is down double digits from April highs, as the U.S. deepwater drilling moratorium has weighed on revenues. But with considerable drilling flexibility and next-generation well technology, Baker Hughes should be able to keep its customer demand high in spite of regulatory limits.
Baker Hughes is one of the biggest names in oilfield service industry, but it's still a nascent force in key markets such as Russia, where the company only took a major interest in the last few years. While that's been a limiting factor in the past for Baker Hughes' revenues, it should provide the opportunity for significant market share growth in 2010 -- particularly after the moratorium.
CEO Chad Deaton has doubled Baker Hughes' growth pace since he took the company's helm in 2004 despite economic headwinds that threatened to stall the company's prospects. Expect good things from this stock in 2010.
Who Owns Baker Hughes?
Dodge & Cox
While not a new position, Pickens' sake in
is notable because of its size. At 10.7% of BP Capital's total portfolio, the company is the second largest single position the hedge fund owns and the biggest increase from the last quarter. McMoRan, a $1.1 billion oil and gas exploraton firm, is having phenomenal stock performance year-to-date; shareholders who bought at the beginning of January are currently sitting on nearly 50% gains.
Those gains have been thanks in large part to the company's major discoveries at Davy Jones, a spot in the Gulf of Mexico that's estimated to contain 2-6 trillion cubic feet of natural gas reserves. While there are a number of challenges in commercializing their find -- particularly given the political situation in the Gulf right now -- this find should prove to be a game changer for McMoRan's business.
More About McMoRan
Fast Money's BP Bombshell Trades
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At the time of publication, author had no positions ins stocks mentioned.
Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.