Success in the oilfield made T. Boone Pickens a billionaire, and he currently manages a good deal of his own money alongside that of clients in his hedge fund BP Capital, focusing on energy related investments. Our database of quarterly 13F filings tracks activity from hundreds of hedge funds as part of our work researching investment strategies (we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year) and also like to compare filings from top managers to their previous ones in order to see which stocks they added to their portfolio. We have gone through BP Capital’s most recent 13F and here are our thoughts on Pickens’s five largest new positions from the first quarter of 2013 (or see the full list of stocks he reported owning):
The fund bought over 120,000 shares of Apache Corporation (NYSE:APA) making that stock Pickens’s second largest 13F holding by market value as of the end of March. While the oil and gas company’s revenue and earnings both declined by 10% last quarter compared to the first quarter of 2012, analysts are expecting Apache Corporation (NYSE:APA) to recover next year and do so quite strongly: their consensus forecasts for 2014 imply a forward P/E of 9. Billionaire Israel Englander’s Millennium Management increased its stake in Apache Corporation (NYSE:APA) to a total of 1.4 million shares during the first quarter of the year (check out Englander’s stock picks).
Also in this category of new downstream picks in Pickens’s portfolio was Marathon Petroleum Corp (NYSE:MPC), a fairly recent spinout from Marathon Oil (NYSE:MRO). Its stock price has also more than doubled in the last year, and this has come with stronger business as both the company’s revenue and net income grew at double-digit rates in its most recent quarter compared to the same period in the previous year. The trailing and forward P/Es here are both 8. Also initiating a position in Marathon Petroleum last quarter was billionaire Andreas Halvorsen’s Viking Global (find Halvorsen’s favorite stocks).
Gulfport Energy Corporation (NASDAQ:GPOR), a $3.7 billion market cap exploration and production company with acreage in the Gulf Coast as well as in shale plays such as the Utica and Bakken, was another of Pickens’s new picks. While revenue and operating income have actually been down, going by recent reports, the market is quite bullish on Gulfport for the long term: the stock carries trailing and forward P/Es of 34 and 23, respectively. Citadel Investment Group was another buyer of Gulfport during Q1; that hedge fund is managed by billionaire Ken Griffin (see more stocks Griffin likes).
The filing showed BP Capital with a new position of a little less than 80,000 shares in Phillips 66 (NYSE:PSX), another refining and marketing company. As with Marathon and Tesoro, even after strong stock performance over the last year (Phillips 66 has more than doubled in price) it is still clearly in value territory (with a valuation of 9 times forward earnings estimates). The sell-side expects significant earnings growth going forward resulting in a five-year PEG ratio of 0.8. Warren Buffett’s Berkshire Hathaway disclosed ownership of over 27 million shares at the end of the quarter (find more stocks Buffett owns).
Disclosure: I own no shares of any stocks mentioned in this article.
