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James Li
James Li
Articles (895)  | Author's Website |

4 Energy Stocks T. Boone Pickens’ BP Capital Keeps Buying

Fund of legendary oil tycoon keeps increasing holdings as crude oil prices reach near four-year high

September 25, 2018 | About:

As crude oil prices reach a four-year high, T Boone Pickens (Trades, Portfolio)’ BP Capital Fund Advisors kept increasing its holdings of four energy companies over the past few quarters: Jagged Peak Energy Inc. (NYSE:JAG), Kinder Morgan Inc. (NYSE:KMI), Shell Midstream Partners LP (NYSE:SHLX) and Targa Resources Corp. (NYSE:TRGP).

According to a letter obtained by CNBC, Pickens closed his hedge fund and turned BP Capital to a family office in January, citing “declining health and performance” as two main reasons. Despite this, BP Capital will still operate its energy-focused mutual funds, which include the BP TwinLine Energy Fund.

Oil prices reach close to four-year high

CNBC said in a Reuters article that crude oil prices reached a four-year high on Tuesday on several factors, including “imminent U.S. sanctions on Iranian crude exports” and the “apparent reluctance of OPEC and Russia” to increase oil outputs. According to GuruFocus economic indicator data, the Brent crude oil price and the West Texas Intermediate crude oil price traded at $78.22 and $68.86 on Sept. 17, close to four-year highs of $97.70 and $94.33.

Jagged Peak Energy

Having established a 209,776-share position in Jagged Peak Energy during the first quarter, the fund added 423 shares in the second quarter for an average price of $13.09 per share.


The Denver-based company primarily acquires and develops unconventional oil and associated liquids-rich natural gas reserves in the Southern Delaware Basin. GuruFocus ranks the company’s financial strength 6 out of 10: Jagged Peak Energy’s debt-to-equity ratio of 0.62 outperforms 93% of global competitors even though the company’s Altman Z-score is a modest 2.40.


Kinder Morgan

The fund increased its Kinder Morgan position 18.16% during the second quarter, adding 53,157 shares for an average price of $16.36 per share.


Houston-based Kinder Morgan transports various energy products through its network of 155 terminals and over 80,000 miles of pipeline. GuruFocus ranks the company’s profitability 5 out of 10: although the company has expanding operating margins, revenues have declined 24.50% per year over the past three years, a rate that underperforms 86% of global midstream energy companies.


Kinder Morgan President Kim Dang said on Sept. 4 that the company expects to reduce its debt-to-EBITDA ratio to around 4.5, consistent with where management expects to end the year. Despite this, the company’s leverage ratio is still above Joel Tillinghast’s safe threshold of 4 and underperforms 73% of global competitors. GuruFocus ranks Kinder Morgan’s financial strength 4 out of 10, suggesting moderate financial distress.

Gurus with large holdings in Kinder Morgan include Steven Romick (Trades, Portfolio), David Abrams (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).

Shell Midstream Partners

The fund added 9,832 shares of Shell Midstream Partners for an average price of $22.44 per share, increasing the position 3.95%.


Shell Midstream Partners owns, operates, develops and acquires pipelines and other midstream assets. GuruFocus ranks the company’s profitability 8 out of 10 on several factors, including net profit margins near a 10-year high of 63.22% and a three-year revenue growth rate that outperforms 76% of global competitors.


Targa Resources

The fund added 6,433 shares of Targa Resources for an average price of $47.51 per share, increasing the position 3.53%.


Targa Resources engages in various activities, including the gathering, compressing and processing of natural gas. GuruFocus ranks the company’s profitability 4 out of 10 and lists two severe warning signs: declining revenues and contracting operating margins. Targa Resources’ net profit margin of 2.54% underperforms 84% of global competitors.


Disclosure: No positions.

About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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