T. Boone Pickens, like Carl Icahn, is an investment legend from the 1970s and '80s, when he was a buyout king (oftentimes hostile). He has transformed himself into one of the most successful hedge fund investors ever.

It's hard enough returning even 10% a year when your assets under management are large (say, more than $100 million), but Pickens returned more than 300% in 2005 on holdings over $2 billion. He made $1.4 billion for himself in 2005 as a result. In 2006, Pickens was up over 26%.

(To see Pickens' holdings, check out his page on Stockpickr.)

Pickens 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. Consequently, this theory is a bet that the price of oil will go higher and higher, as will the stocks involved in drilling for oil and the stocks looking for energy alternatives.

Pickens, along with one of my favorite deep value funds Al Frank Asset Management, is a shareholder in GlobalSantaFe ( GSF), which provides offshore drilling services worldwide.

Analysts expect the company to double its earnings to $7.13 a share in 2007, meaning it's trading at just eight times earnings and about five times cash flows currently. With EBITDA (earnings before interest, taxes, depreciation and amortization) over $1 billion and net debt of only $220 million, it's an excellent candidate to either get taken over or leverage up and buy back shares. If oil bottoms near $50 a barrel -- as Pickens expects it to, according to a recent interview with Playboy magazine -- GlobalSantaFe will recover handsomely, as analysts scramble to reverse recent downgrades.

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