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Yamil Berard
Yamil Berard
Articles (46) 

T. Boone Pickens' Top 4 New Buys

The famous wildcatter effectively retired last month, but his portfolio reflects a flurry of activity in the last quarter of the year

February 14, 2018 | About:

Thomas “T” Boone Pickens Jr. may have retired from running a pair of energy hedge funds, but the oil tycoon’s portfolio activity is showing few signs of slowing down.

BP Capital Fund Advisors LLC kicked off four positions in the last quarter of 2017. It favored stocks of independent upstream and midstream drillers and producers, and one buy in a company that provides sand for hydraulic fracturing.

Overseas exporter

Fourth-quarter disclosures show the investor bought over 75,000 shares of Continental Resources Inc. (NYSE:CLR) for an average price of $43.80 per share.

The Oklahoma City-based Continental fills a space of about 1.45% in BP Capital’s portfolio of 51 stocks, which is valued at $277 million.

The independent crude oil and natural gas exploration and production company, mostly focused on the Bakken Shale in North Dakota, announced its first oil export contract in the fall with plans to sell oil overseas to places like China.

In Wednesday trading, the company was up 4% to over $53 a share. It has seen its share price shoot up by 14% in the last 12 months on approximately $2 billion in revenues, which fell from $5 billion in 2015. The company will announce fourth-quarter and full-year 2017 earnings on Feb. 22.

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Continental has a market cap of $20 billion and a ranking by GuruFocus of 4 out of 10 in financial strength and 8 of 10 in profitability and growth. The lower ranking in financial strength, in part, stems from a debt load of more than $614 million issued over the last three years.

In the midstream

The portfolio includes 166,883 in new shares of Houston-based BP Midstream Partners LP (NYSE:BPMP). The company was formed late last year by BP Pipelines, a subsidiary of BP (BP). It owns, operates and acquires pipelines and other midstream assets.

The average price for each unit was $18.21. It holds 1.24% of the portfolio.

The stock was up 5% in afternoon trading to $20.57 a share. Since it began trading in November, the stock has climbed 19%.

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The company has a market cap of $1 billion. GuruFocus rates the company a 6 of 10 in financial strength and a 5 of 10 in profitability and growth.

Sand supplier

US Silica Holdings Inc. (NYSE:SLCA) is one of the leading suppliers of sand used in hydraulic fracturing of oil and gas wells. More than 98,000 shares sit in 1.15% of the portfolio. The average price per share was $31.80.

US Silica, which is headquartered in Maryland, jumped 2% in late afternoon trading. The stock has lost 51% in the last 12 months.

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The company has a market cap of $2.32 billion. Revenue per share has been on the decline in the last year, as have gross margins. However, the company’s price-book (P/B) ratio is close to a 10-year low and it has a high Piotroski F-score, which are good signs. For these reasons, GuruFocus ranks it 6 of 10 in financial strength and 8 of 10 in profitability and growth.

North Dakota drilling

Independent oil and gas producer Oasis Petroleum Inc. (NYSE:OAS) was bought at a price of $9.20 per unit for a total of more than 331,000 units.

The Houston-based company operates exclusively in the Williston Basin. It has accumulated about 506,000 net leasehold acres in the Williston Basin, focusing on the Bakken and Three Forks formations.

The company announced in December a public offering of 32 million shares of common stock for total gross proceeds of about $305.6 million.

Oasis stock was up 4% in afternoon trading at $8 a share. It has lost 44% in the last 12 months.

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GuruFocus rates the company a 3 of 10 in financial stability and a 5 of 10 in profitability and growth. The low ratings are attributable, in part, to extremely low interest coverage and declining revenue and gross margins in the last year.

Retirement

Pickens announced on Jan. 12 he was retiring from his daily involvement in the two energy-based hedge funds he established in 1997. He said the funds would "move toward a family office structure."

Last year, he wrote in a LinkedIn post that he had suffered a series of strokes, which required him to scale back on his business activity. He also said he was undergoing rigorous speech therapy to regain some of the sharpness he had lost after a “Texas-sized fall” landed him in the hospital.

He wrote: “Just as I exercise my body daily, I will exercise my brain and continue with rigorous speech therapy to regain what I can. I am always up for a good challenge.”

The famous wildcatter turns 90 in May.


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