T. Boone Pickens Calls It Quits on Energy Trading

The oilman and investment manager cites deteriorating health and poor returns; fund will move toward a family-office structure

T. Boone Pickens, 89 years old, wrote in his letter to investors, ‘Trading oil is not as intriguing to me as it once was.”’
T. Boone Pickens, 89 years old, wrote in his letter to investors, ‘Trading oil is not as intriguing to me as it once was.”’ PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS

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T. Boone Pickens, a famous oilman and investment manager, said he is closing the energy-focused hedge fund he has run for the last two decades as his health declines.

The move closes a chapter in a nearly seven-decade career that has included stints as a wildcatter, corporate raider, cattle trader and clean-energy evangelist.

The 89-year-old Oklahoma native cited both his deteriorating health and weak financial performance as reasons for closing the fund, according to a letter that he plans to publish soon and was reviewed by The Wall Street Journal. Mr. Pickens said he is recovering from a series of strokes last year and a bad fall.

“It’s no secret the past year has not been good to me, from a health perspective or a financial one,” he wrote in the letter. “If you are lucky enough to make it to 89 years of age like I have, those things tend to put life in perspective.”

“Trading oil is not as intriguing to me as it once was,” he added.

A spokesman for Mr. Pickens declined to comment on the fund’s size or returns. The fund managed more than $2 billion a decade ago, the Journal reported at the time. In recent years, the firm’s assets, including a private-equity fund and some mutual funds that will continue running, totaled about $1 billion, according to a person familiar with the matter.

The letter said his hedge fund would move toward a family-office structure. Family offices manage the fortunes of the wealthy and are able to sidestep much of the regulatory scrutiny experienced by firms that handle outside clients’ money.

Two of Mr. Pickens’s top lieutenants, Brian Bradshaw and David Meaney, have already left BP Capital and will jointly launch an energy fund, Assert Capital Management, next week. Mr. Pickens will be an investor, Mr. Meaney said.

There have been other signs Mr. Pickens is looking to simplify. Late last year, Mr. Pickens listed his massive Mesa Vista ranch for sale, asking $250 million. He pieced together the 64,809-acre ranch through multiple purchases starting in 1971. There he has explored for oil, entertained oil magnates and politicians and hosted epic quail hunts. It includes its own air strip, an 11,000-square-foot kennel for his 40 bird dogs and a chapel where he once married.

His decision to wind down the fund follows closures of several other commodity funds that have struggled with low returns and redemptions amid plummeting prices. Even as oil prices started to recover last year from a rout that began in 2014, trading conditions were harsh for funds that specialize in energy.

Prominent oil trader Andrew Hall said last summer that he would wind down the main hedge fund at Astenbeck Capital Management. Madava Asset Management, led by veteran energy trader George “Beau” Taylor, is also shutting.

T. Boone Pickens, an Oklahoma native, was a generous donor to his alma mater, Oklahoma State University. Above, with Oklahoma State strength coach Rob Glass in August 2009.
T. Boone Pickens, an Oklahoma native, was a generous donor to his alma mater, Oklahoma State University. Above, with Oklahoma State strength coach Rob Glass in August 2009. PHOTO: SUE OGROCKI/ASSOCIATED PRESS

In recent years, Mr. Pickens ran his financial firm from a conference room in its Dallas office. On the wall next to him hung maps showing the drilling projects scheduled for his 100-square-mile ranch in the Texas Panhandle. Visitors, including reporters, would find him with a bowl of bite-size Butterfinger candy bars by his side and a small dog at his feet.

He tended to focus on commodity bets, while others at the small firm picked stocks. The firm’s recent securities filings detail a portfolio loaded with pipeline operators, Permian Basin oil drillers and the odd chemical company and airline.

Mr. Pickens’s convictions often resulted in volatile returns, but the fund delivered what it promised, which was exposure to energy, according to people familiar with the fund’s performance.

“I’m surprised he didn’t quit a decade ago,” said John Trammell, a former investor with Mr. Pickens. “All of us can hope to be that engaged at his age.”

Mr. Trammell said that the volatility in returns was a reason his former fund of hedge-funds firm had invested with Mr. Pickens, but that his clients became uncomfortable with mounting losses around 2010.

Still, he said he considers Mr. Pickens one of the most informed energy traders in the hedge-fund industry. “He had a very good model for global oil flows and he had a very good understanding of the decision-making process in the Middle East.”

Mr. Pickens trained as a geologist and started his career at Phillips Petroleum. In the 1950s, he started the company that would become Mesa Petroleum Corp., which went on to make a string of unsolicited bids for much larger rivals.

He become a corporate raider in the 1980s and made his share of enemies. In 1983, Mesa made a bid for Gulf Corp., one of the country’s largest companies. Even though it wasn’t successful, Mr. Pickens’s run at Gulf forced the oil titan into the arms of Chevron Corp. and a Pickens-led investment group earned $760 million when the shares it bought in Mesa appreciated during the takeover attempt.

Mesa met trouble in the mid-1990s, when low natural gas prices sapped its profitability. Mr. Pickens was ousted, and the company was merged with a company that eventually became the giant shale driller Pioneer Natural Resources Co. He launched BP Capital in 1996 after he left Mesa.

In recent years Mr. Pickens reinvented himself as a promoter for the domestic energy industry, arguing that the U.S. needed to wean itself from foreign oil with more natural gas and wind power. But the energy renaissance he championed, fueled by shale drilling, helped produce a glut of oil and natural gas that sent prices tumbling.

Mr. Pickens described himself as “a victim of [his] own success,” as the U.S. energy industry’s output helped dampen volatility and made it harder to eke out profits from trading.

“I’m ecstatic that I’ve hung on long enough to see it all unfold,” Mr. Pickens wrote in his letter.

Write to Alison Sider at alison.sider@wsj.com, Ryan Dezember at ryan.dezember@wsj.com and Juliet Chung at juliet.chung@wsj.com

https://www.wsj.com/articles/t-boone-pickens-calls-it-quits-on-energy-trading-1515754980

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One Response to “T. Boone Pickens Calls It Quits on Energy Trading”

  1. Brittius Says:

    Reblogged this on Brittius.

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