BP Capital, the hedge fund of the now-retired oil tycoon T Boone Pickens (Trades, Portfolio), disclosed six new positions in its third-quarter portfolio, which was released last week.
The Texas-based firm, which transitioned to a family office structure in January as a result of deteriorating performance and Pickens' declining health, operates two energy-focused mutual funds. When picking stocks, the portfolio managers look for investment opportunities that will benefit from the changing landscape of the oil and gas industry in the U.S.
Based on these criteria, the firm established positions in Williams Companies Inc. (WMB, Financial), Knight-Swift Transportation Holdings Inc. (KNX, Financial), Antero Resources Corp. (AR, Financial), Noble Midstream Partners LP (NBLX, Financial), Antero Midstream Partners LP (AM, Financial) and ONEOK Inc. (OKE, Financial).
Williams Companies
Having previously closed a position in Williams Companies in the first quarter of 2017, the firm established a new 625,170-share holding for an average price of $29.02 per share, giving it 4.60% space in the equity portfolio.
The Tulsa, Oklahoma-based midstream oil and gas company has a market cap of $30.66 billion; its shares were trading around $25.35 on Monday with a price-earnings ratio of 10.13, a price-book ratio of 1.97 and a price-sales ratio of 2.54.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
GuruFocus rated Williams Companies’ financial strength 4 out of 10. Not only does the company have poor interest coverage, but the Altman Z-Score of 0.62 indicates it is at risk of going bankrupt. The company’s profitability and growth scored a 5 out of 10 rating. Although the operating margin is expanding, it underperforms 66% of competitors. This is offset by a strong net margin, good returns and a moderate Piotroski F-Score of 5, which suggests operations are stable. The company also has a business predictability rank of one out of five stars. While GuruFocus says companies with this rank usually see their stock prices gain an average of 1.1% per year, it is currently on watch as a result of declining revenue per share over the last five years.
Of the gurus invested in Williams Companies, Larry Robbins (Trades, Portfolio) has the largest position with 0.8% of outstanding shares. Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Steven Cohen (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), George Soros (Trades, Portfolio) and John Hussman (Trades, Portfolio) are also shareholders.
Knight-Swift Transportation
Pickens’ firm invested in 7,304 shares of Knight-Swift for an average price of $35 per share, allocating 1.64% of the equity portfolio to the position.
The truckload carrier service, which is headquartered in Phoenix, has a $5.95 billion market cap; its shares were trading around $33.40 on Monday with a price-earnings ratio of 6.16, a price-book ratio of 1.10 and a price-sales ratio of 1.23.
According to the Peter Lynch chart, the stock is undervalued.
Boosted by high interest coverage, Knight-Swift’s financial strength was rated 6 out of 10 by GuruFocus. The Altman Z-Score of 2.51, however, suggests the company is under some financial pressure. The company’s profitability and growth scored a 7 out of 10 rating. Although the operating margin is in decline, it is outperforming 61% of industry peers. In addition, the company has a good net margin and positive returns. It also has a moderate Piotroski F-Score of 4 and a three-star business predictability rank. According to GuruFocus, companies with this rank not only have consistent earnings and revenue growth, but also see their stock prices gain an average of 11% per year.
Cohen is the company’s largest guru shareholder with 0.95% of outstanding shares. David Tepper (Trades, Portfolio), Pioneer, Chuck Royce (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio) and David Dreman (Trades, Portfolio) also hold the stock.
Antero Resources
BP Capital picked up 193,917 shares of Antero Resources for an average price of $19.36 per share, dedicating 1.5% of the equity portfolio to the holding.
The Denver-based oil and gas producer has a $5.04 billion market cap; its shares were trading around $15.90 on Monday with a price-earnings ratio of 24.10, a price-book ratio of 0.64 and a price-sales ratio of 1.35.
Based on the Peter Lynch chart, the stock appears to be overpriced.
Weighed down by approximately $1.1 billion in new long-term debt, poor interest coverage and an Altman Z-Score that signals bankruptcy risk, Antero Resources’ financial strength was rated 4 out of 10 by GuruFocus. The company’s profitability and growth scored a 7 out of 10 rating as a result of strong margins and returns as well as a high Piotroski F-Score of 7.
With 8.38% of outstanding shares, Seth Klarman (Trades, Portfolio) is by far the company’s largest guru shareholder. Glenn Greenberg (Trades, Portfolio), David Swensen (Trades, Portfolio), Pioneer, Alan Fournier (Trades, Portfolio) and Cohen also own the stock.
Noble Midstream
After selling out of Noble Midstream in the third quarter of 2017, the firm opened a new 179,053-share holding for an average price of $46.60 per share. The trade had an impact of 0.63% on the equity portfolio.
The midstream energy company, which is based in Houston, has a market cap of $1.52 billion; its shares were trading around $38.42 on Monday with a price-earnings ratio of 9.32, a price-book ratio of 2.80 and a price-sales ratio of 3.52.
The Peter Lynch chart suggests the stock is undervalued.
GuruFocus rated Noble Midstream’s financial strength 5 out of 10. While the company has issued roughly $548.5 million in new long-term debt over the last three years, it is at a manageable level due to sufficient interest coverage. The Altman Z-Score of 1.83, however, indicates the company is experiencing some financial stress. The company’s profitability and growth scored a 7 out of 10 rating as a result of good margins and returns as well as a moderate Piotroski F-Score of 6.
With its purchase of 0.45% of outstanding shares, Pickens’ firm is now the company’s largest guru shareholder. Simons and Ron Baron (Trades, Portfolio) are also shareholders.
Antero Midstream
Having sold out of Antero Midstream in the fourth quarter of 2017, the firm purchased a new position of 43,781 shares for an average price of $30.64 per share, impacting the equity portfolio by 0.55%.
The midstream oil and gas company, which, like its parent company, Antero Resources, is headquartered in Denver, has a $5.23 billion market cap; its shares were trading around $27.97 on Monday with a price-earnings ratio of 18.64, a price-book ratio of 3.35 and a price-sales ratio of 5.47.
According to the Peter Lynch chart, the stock is overpriced.
Antero Midstream’s financial strength was rated 5 out of 10 by GuruFocus. Despite issuing approximately $1 billion in new long-term debt over the last three years, it is at a manageable level as a result of sufficient interest coverage. The Altman Z-Score of 2.44, however, suggests the company is experiencing some financial pressure as a result of a slowdown in revenue per share growth over the last 12 months. The company’s profitability and growth scored an 8 out of 10 rating, boosted by strong margins and returns and a moderate Piotroski F-Score of 6.
The firm holds 0.02% of the company’s outstanding shares.
ONEOK
BP Capital bought 297,655 shares of ONEOK for an average price of $68.45 per share, giving it 0.23% space in the equity portfolio.
The Tulsa, Oklahoma-based midstream energy company, which gathers, processes and transports natural gas and liquefied natural gas, has a $26.06 billion market cap; its shares were trading around $63.19 on Monday with a price-earnings ratio of 29.33, a price-book ratio of 3.91 and a price-sales ratio of 1.94.
Based on the Peter Lynch chart, the stock appears to be overpriced.
Weighed down by approximately $233.5 million in new long-term debt and poor interest coverage, ONEOK’s financial strength was rated 5 out of 10 by GuruFocus. The Altman Z-Score of 2.43 also suggests it is under some financial pressure. The company’s profitability and growth scored a 6 out of 10 rating, boosted by an expanding operating margin, a high Piotroski F-Score of 8 and a one-star business predictability rank. The rank is on watch, however, as the company has recorded a decline in revenue per share over the last five years.
Of the gurus invested in ONEOK, Simons’ firm has the largest position with 0.17% of outstanding shares. Pioneer, Mario Gabelli (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and Hussman are also shareholders.
Other trades
During the quarter, the firm also expanded a number of holdings, including MPLX LP (MPLX, Financial), Targa Resources Corp. (TRGP, Financial), Phillips 66 Partners LP (PSXP, Financial) and Shell Midstream Partners LP (SHLX, Financial).
The $229.57 million portfolio, which is composed of 53 stocks, is largely invested in the energy sector, with substantially smaller positions in the basic materials and industrials sectors. According to BP’s website, the TwinLine MLP Fund outperformed its benchmark, the Alerian MLP Index, in 2017 with a return of -4.75%. The index posted a -6.52% return.
Disclosure: No positions.
Read more here:
