Stocks in the Spotlight

After predicting a bottom in oil prices, T. Boone Pickens invests in energy companies

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Jan 22, 2016
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Indexes finished slightly up on Thursday but well off the session highs. There were some comments out of Davos, Switzerland, that the European Central Bank will offer more stimulus at its next meeting in March.

If you own anything related to energy, Khalid al-Falih, chairman of Saudi Aramco, had an interesting comment, saying oil has “overshot” to the downside, and it is inevitable that the price will start turning higher. As expected, oil prices and energy stocks related to oil had a nice rebound. Khalid’s comments come at the same time T. Boone Pickens is calling a bottom in oil. Several energy companies Pickens has purchased recently are:

  • Whiting Petroleum Corp. (WLL, Financial), recently purchased at an average of $20 per share, had an impact of 4% to the portfolio. Value investor Mario Gabelli (Trades, Portfolio) is also a buyer, but the impact to his portfolio is much smaller.

    Whiting Petroleum Corp. (WLL), recently purchased at an average of $20had an impact of 4% to the portfolio. Value investor Mario Gabelli (Trades, Portfolio) is also a buyer but the impact to his portfolio is much smaller.

  • Pioneer Natural Resources (PXD, Financial) at an average price of $124.62 per share. The purchase had a 1.13% impact on Pickens’ portfolio and increased his stake by more than 8%. Pioneer is very interesting as several other well-known value investors are also building up a stake. The list includes Seth Klarman (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio) and Wallace Weitz (Trades, Portfolio).

    Pioneer Natural Resources (PXD) an average price of $124.62 per share. The purchase had a 1.13% impact on Pickens’ portfolio and increased his stake by more than 8%. PXD is very interesting as several other well known value investors are also building up a stake. The list includes Seth Klarman (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), and Wallace Weitz (Trades, Portfolio).

  • Parsley Energy (PE, Financial) was first purchased in early 2015 at an average price around current levels. Pickens recently added another 144,000 shares which had a 1% impact to his portfolio.

    Parsley Energy (PE), was first purchased in early 2015 at an average price around current levels. Pickens recently added another 144,000 shares which had a 1% impact to his portfolio.

  • EOG Resources (EOG, Financial): Pickens first purchased EOG when it traded in the high 80s / low 90s. The stock is now trading in the low 60s, where Pickens recently added 36,000 shares.

    EOG Resources (EOG) Pickens first purchased EOG when it traded in the high 80’s/ early 90’s. The stock is now trading in the low 60’s, where Pickens recently added 36,000 shares.

  • WPX Energy (WPX, Financial) jumped 20% on Thursday as it added more hedges to protect cash flow and purchased some notes that were due in 2017. Pickens first started purchasing WPX when it was in the $20s. The stock at one point traded below $3.

    WPX Energy (WPX) jumped 20% on Thursday as it add more hedges to protect cash flow and purchased some notes that were due in 2017. Picken’s first started purchasing WPX when it was in the $20’s. The stock at one point traded below $3.

Starbucks (SBUX, Financial) was down after hours after the coffee chain reported disappointing sales. Earnings came in at 46 cents per share at a time when analysts were expecting 45 cents per share, but analysts were mainly disappointed with the company’s top line which came in at $5.37 billion. The coffee chain also missed some key metrics in China (5% growth) and Europe (6%).

The stock traded near $60 on Thursday but fell to the mid-$50s as soon as revenues disappointed. There haven’t been many gurus purchasing Starbucks in the past couple of years as the stock has had a nice advance. As such, gurus have been net sellers of Starbucks with Ron Baron (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), and Ken Fisher (Trades, Portfolio) taking advantage of the stock’s advance to trim their positions.

Boeing (BA, Financial), the world’s largest plane maker, announced it will cut back production of its 747-8 aircraft and will take a $569 million charge. The move reflects slower demand for the plane:

"Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 Freighter," said Ray Conner, Boeing's vice chairman, in a statement.

Gurus have been net sellers of Boeing. Fisher and Joel Greenblatt (Trades, Portfolio) recently added to their existing stakes, but neither stake has a major impact to their portfolios.

Tiffany’s (TIF, Financial), a specialty jewelry retailer, announced a new $500 million stock repurchase program that will last through Jan. 31, 2019. The new program replaces an existing program that had around $61 million available for repurchases. The new program comes at a time its share price is trading at levels it has not seen since early 2013 and is currently facing some major headwinds such as a strong U.S. dollar and uncertain global conditions.

Gurus Ruane Cunniff and Greenblatt recently added to their positions in the jeweler, but neither position is significant.

Finally, shares of credit card company American Express (AXP, Financial) will be in focus as its shares were significantly lower after Thursday’s close despite beating analyst estimates. Earnings, excluding items, came in at $1.23 per share versus analysts' estimates of $1.12 per share. So why are shares lower? For one, sales and EPS are significantly lower than one year ago mainly due to a strong dollar and the loss of an exclusive partnership with retail giant Costco (COST, Financial). Several gurus added or established new positions in American Express at higher prices. The list includes Fisher, Bill Nygren (Trades, Portfolio), Robert Olstein (Trades, Portfolio) and Dodge & Cox to name a few.