Wednesday, September 24, 2008

Pickens' funds slammed

Lately, T. Boone Pickens would get better marks as a policy advocate and author than an energy investor.

The 80-year-old Texas oil magnate has bankrolled a massive public campaign for improved U.S. energy independence, and his new book, "The First Billion is the Hardest," is a best seller. But the downturn in energy has blindsided the industry veteran, leaving one of his hedge funds that focuses on energy stocks down almost 30% through August. A smaller commodity-focused fund is down 84%...

All in, the funds have lost around $1 billion this year, a figure that includes $270 million of personal losses. "It's my toughest run in 10 years," said Mr. Pickens, a former geologist who earned billions by building an oil company and investing in energy. "We missed the turn in the market, there's nothing fun about it."

Until lately, money had gushed from Mr. Pickens's trading desk as energy prices climbed. His energy-stock fund, which started the year at $2 billion, has returned a compounded annual return of 37% over seven years, according to an investor. The commodity fund, which started the year at about $600 million, has had similar strong performance. That fund relies heavily on borrowed money, resulting in the deeper losses

You can read more about Pickens here.

I said that on oil prices, "A good scam, always suckers in a believable billionaire. Higher prices seems to do that. This time it was T. Boone Pickens and the "85 million barrels produced, and the 87 million barrels oil needed" mantra."

The deleveraging of markets is painful. But T. Boone will be back. But now we know why his wife Madeline sold 1,100,000 shares of Clean Energy Fuels the last two weeks.

Just sobering news.

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