August 23, 2012 / 12:15 AM / in 5 years

In 2012, oil a boon to Boone Pickens fund

NEW YORK (Reuters) - T. Boone Pickens, the billionaire Texas hedge-fund manager, said on Wednesday that oil, the commodity that brought him fame and fortune, has again been a boon for his main portfolio this year.

“We’ve done well in the oil markets,” Pickens, whose commodities fund has produced double-digit returns in the first eight months of the year, told Reuters on Wednesday.

Oil prices remain high by historical standards. Brent crude oil has averaged so far this year at over $114 a barrel, substantially higher compared to last year's move when the International Energy Agency (IEA) reported the spot price of Brent averaging $111.26 per barrel in 2011. That marked the first time the global benchmark averaged more than $100 per barrel for a year.( here )

Hedge funds focused on investing in energy and basic materials were down 5.77 percent year to date through July 31, according to hedge fund tracking firm HFR.

Wednesday, Brent October crude traded at $114.91 a barrel.

Pickens said that in light of the hostile political rhetoric coming out of the Middle East, “Right now, I would not short oil.”

Pickens, whose BP Capital sold all of its holdings in No. 2 U.S. gas producer Chesapeake Energy in the second quarter, said that natural gas prices should reach $4 this year. Natural gas prices closed at $2.826 on Wednesday.

The fund has one small gas position right now, he added.

Pickens lamented the continued dependence of the United States on foreign energy sources, in particular the country’s reliance in the Organization of the Petroleum Exporting Countries (OPEC), and both of the main U.S. political parties.

“Properly managed energy can bring back the economy,” said Pickens, who has presented his ideas for solving America’s energy problems to both President Obama’s administration and Republican presidential candidate Mitt Romney’s camp.

In 2008, he released his own energy policy proposal, called the “Pickens Plan,” which advocates greater use of natural gas instead of imported oil for transportation fuel, and further development of alternative energy sources like wind and solar power.

Pickens, who at 84 still works out every morning at 6:30 a.m., said he has no intention of stepping back from the firm or converting the fund into a family office, as some other veteran hedge fund managers have done recently.

Investing titans George Soros, Carl Icahn and Stanley Druckenmiller have all returned investor money in the past few years, managing money only for themselves and their families.

Pickens said he is still in the office by 8 a.m. every day, where he remains at least until the markets close.

Reporting by Katya Wachtel; Editing by Jennifer Ablan

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