Graduated from Oklahoma State 1951 with degree in geology. Three-year stint at Phillips Petroleum. Left to start Mesa Petroleum 1956 with $2,500. Sold to Richard Rainwater; made name with attempted takeovers of Phillips, Unocal. Invests via energy fund BP Capital; owns extensive water rights in Texas Panhandle. Born-again environmentalist still stumping for "Pickens Plan," proposal to replace addiction to foreign oil with mixture of wind, nuclear, natural gas. Delayed construction of massive wind farm in Texas after credit markets seized and natural gas prices fell in 2008. Published memoir The First Billion Is the Hardest last year.Investing in a single sector, Pickens’s fortune fluctuate with oil price and as near as 2009, Forbes ranked him No. 334 richest person in the world in 2009 with $2 billion, and even then, the magzine cited the plunging energy prices as the reason for him to lose $1 billion in his BP Capital Fund. It appears Pickens’s investments had a couple of rough years in a row.
Short terms investment performance aside, the billionaire deserves our respect for his philanthropy activities. The 81 year old Mr. Pickens has donated generously. According to a Reuter’s report in May 2008, Pickens has donated more than $700 million by that time.
Like many rich folks, once they got rich, they found a higher calling. For Mr. Pickens, the cause is the “Pickens Plan”. The plan’s website listed the following “pillars” of the plan:
- Create millions of new jobs by building out the capacity to generate up to 22 percent of our electricity from wind. And adding to that with additional solar generation capacity;
- Building a 21st century backbone electrical transmission grid;
- Providing incentives for homeowners and the owners of commercial buildings to upgrade their insulation and other energy saving options; and
- Using America's natural gas to replace imported oil as a transportation fuel in addition to its other uses in power generation, chemicals, etc.
One has to give the old gentleman the credit he deserves for being so persistent. According to the interview he gave to CNBC’s Jim Cramer recently, he has made quite a bit of progress in getting his plan of the ground. In the interview, he also discussed the oil spill situation in the Mexico Gulf. One of the companies he invests in, Transocean is involved in the disaster.
But his investments in stocks have not done so well latterly. According to GuruFocus data, as of March 31, 2010, he invested $162 million in 15 stocks, almost exclusively in Oil & Gas companies. Here are the top holdings:
No. 1: Transocean Inc. (RIG), Weightings: 18.36% - 345,980 Shares
Transocean LTD., formerly Transocean Inc., is an international provider of offshore contract drilling services for oil and gas wells. Transocean Inc. has a market cap of $16.15 billion; its shares were traded at around $50.2 with a P/E ratio of 5.1 and P/S ratio of 1.5. Transocean Inc. had an annual average earning growth of 22% over the past 10 years. GuruFocus rated Transocean Inc. the business predictability rank of 2-star.
Pickens kept his position in this stock steady during 1Q10. The company owns the rig in the now infamous Deepwater Horizon in the Gulf of Mexico. The stock price has dropped to around $50 from the 1Q10 quarter end price of more than $86.
No. 2: McMoRan Exploration Co. (MMR), Weightings: 10.66% - 1,186,425 Shares
McMoRan Exploration Co. is engaged in the exploration, development and production of oil and gas offshore in the Gulf of Mexico and onshore in the Gulf Coast region, and in the mining, purchasing, transporting,terminaling, processing and marketing of sulfur. Mcmoran Exploration Co. has a market cap of $936.6 million; its shares were traded at around $10.14 with and P/S ratio of 2.1.
The stock has declined to today’s $10 per share from $14.63 per share at the end of 1Q10. Pickens bought about 200,000 shares in 1Q10. Click here to access Pickens’s holding history in this stock.
No. 3: Weatherford International, Ltd. (SWITZERLAND) (WFT), Weightings: 8.81% - 903,781 Shares
Weatherford International is a providers of equipment and services used for the drilling, completion and production of oil and natural gas wells. Weatherford International, Ltd. (switzerland) has a market cap of $9.78 billion; its shares were traded at around $13.25 with a P/E ratio of 42.8 and P/S ratio of 1.2. Weatherford International, Ltd. (switzerland) had an annual average earning growth of 18.5% over the past 10 years. GuruFocus rated Weatherford International, Ltd. (switzerland) the business predictability rank of 3.5-star.
Pickens bought an additional 290, 000 shares in 1Q10. . Click here to access Pickens’s holding history in this stock.
No. 4: SandRidge Energy, Inc. (SD), Weightings: 8.52% - 1,799,860 Shares
SandRidge Energy, Inc. is an oil and natural gas company headquartered in Oklahoma City with its principal focus on exploration and production. Sandridge Energy Inc has a market cap of $1.4 billion; its shares were traded at around $6.64 with a P/E ratio of 12.2 and P/S ratio of 2.4.
Pickens bought more than 200,000 shares during 1Q10. Pickens has been losing money dearly on this stock. He bought a good portion of this stock in 1Q08 when the stock was traded at $39 per share.
Click here to access Pickens’s holding history in this stock.
No. 5: Smith International Inc. (SII), Weightings: 8.22% - 312,285 Shares
Smith International, Inc. is a supplier of products and services to the oil and gas exploration and production industry, the petrochemical industry and other industrial markets. Smith International Inc. has a market cap of $9.29 billion; its shares were traded at around $37.38 with a P/E ratio of 74.7 and P/S ratio of 1.1. The dividend yield of Smith International Inc. stocks is 1.3%. Smith International Inc. had an annual average earning growth of 19.4% over the past 10 years. GuruFocus rated Smith International Inc. the business predictability rank of 3.5-star.
Pickens bought about 100,000 additional shares in 1Q10. . Click here to access Pickens’s holding history in this stock.
No. 6: Suncor Energy Inc. (SU), Weightings: 7.46% - 373,037 Shares
SUNCOR ENERGY is in the business of mining and extracting crude oil from the vast oil sands deposits of northern Alberta. Suncor Energy Inc. has a market cap of $47.84 billion; its shares were traded at around $30.65 with a P/E ratio of 47.2 and P/S ratio of 2. The dividend yield of Suncor Energy Inc. stocks is 1.3%. Suncor Energy Inc. had an annual average earning growth of 17.5% over the past 10 years. GuruFocus rated Suncor Energy Inc. the business predictability rank of 2-star.
This is a very long-term holding in Pickens’s portfolio. . Click here to access Pickens’s holding history in this stock.
Many of Pickens’s stocks are not doing too well latterly because of the oil spill. His style of investing in one sector is bound to have periods like this. But Pickens has been in the business for about 50 years. Oil and Gas is his circle of competence. Perhaps he has seen a number of ups and downs, and he knows how to ride a tide like today.
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About the author:
My name is Ben C. and I am 2nd year MBA candidate at the Anderson School of Business at the University of California- Los Angeles. I have a BS in Economics from the Wharton School of Business at the University of Pennsylvania. Before coming to Anderson I worked as a generalist equity research analyst for Right Wall Capital, a long-short equity hedge fund located in New York City. Prior to working at Right Wall I worked as an analyst at Blue Ram Capital, another long-short equity hedge fund located in Rye Brook, NY. This past summer, I worked for West Coast Asset Management as a research analyst. West Coast, which was co-founded by Kinko’s founder Paul Orfalea, is run by well-known value investors Lance Helfert and Atticus Lowe.