Boone Pickens Takes A Hit
If you wonder who was panicking to sell their energy and commodity holdings over the last month, it wasn't just the newly minted oil bulls. Even veterans like T.Boone Pickens got hurt in the correction.
Here is a copy of an article from the New York Post:
T. Boone Pickens has been an oilman for nearly 60 years, but all that experience counted for little last month as the well-schooled octogenarian tycoon took a beating on oil and natural gas bets, The Post has learned.
Sources say the commodity half of the legendary wildcatter's hedge fund BP Capital sank about 35 percent in July. The fund is believed to be down about 10 percent currently for the year.
"We notified our commodity-fund investors last week that the steep decline in natural gas and oil prices has had an adverse impact on our performance," a Pickens spokeswoman said in an e-mail.
"We continue to analyze the market and adjust accordingly," she added, declining to comment further.
The embarrassing losses come as Pickens, 80, has shelled out millions to promote a major alternative-energy policy campaign designed to break the US of its addiction to foreign energy.
In his pitch, Pickens pushes harnessing wind energy from Middle America and using it to replace natural gas as a source of electricity. The freed-up natural gas could then be used to power cars, and thus cut America's reliance on oil from the Middle East.
To be sure, volatility has pinched many savvy hedge funds recently as commodity prices have plunged, but Pickens' stumbling is particularly biting since the oil-and-gas magnate has been portraying himself as a energy sage to the US presidential candidates.
Dallas-based BP Capital manages about $7 billion in assets through two funds, BP Capital Commodity and BP Capital Equity. About half of the hedge-fund holding entity is owned by Pickens.
Back in April, Pickens was predicting that oil prices would hit $150 a barrel due to high demand and insufficient global production. He also downplayed the view that speculative investors were driving up energy prices.
"When you have 85 billion [barrels of oil] to cover 87 billion, the price has to go up," he said during an energy conference hosted by his alma mater, Oklahoma State University's business school.
And Pickens was very nearly right when crude oil hit a record high of $147.27 on the New York Mercantile Exchange in mid-July.
However, since then oil has plummeted about $35 to about $113 a barrel. Ironically, the retrenchment might be due to expectations the US and other developed nations might be scaling back on oil usage.