An article in the Wall Street Journal last month mentioned that Boone Pickens' hedge funds had lost nearly $1 billion for the year through August 31st. One fund was down nearly 30% through 8/31 and another smaller commodity-focused fund was down 84%. The Boone Pickens funds are energy specific, and the S&P 500 Energy sector is down another 34% since the end of August.
While the BP Capital holdings have not been released yet for the end of the third quarter, the holdings as they stood at the end of the second quarter indicate that performance has most likely gotten much worse since the end of August unless serious hedging strategies were put in place.
Below we highlight equities that the fund held as of the end of the second quarter. We highlight the performance of each stock in Q3, since the end of Q2, and in October alone through last Friday. As shown, while most stocks were down significantly in the third quarter, they got absolutely slaughtered in the first eight trading days of October. Many people attribute much of the decline over the last week or so to margin calls and forced selling from hedge funds. With the huge declines in energy stocks this month, one has to wonder if the BP funds were part of it.
Many may remember the huge $165 million contribution that Pickens made to Oklahoma State's athletic department back in 2005. While it worked out well in '06 and '07, unfortunately Pickens "insisted that the money be managed by BP Capital." Darren Rovell has an interesting article on the OSU story over at CNBC.com today.
The release of BP Capital's holdings at the end of the third quarter should be coming soon, and it will be very interesting to see how they have changed over the last three months. If they didn't change much, it's hard to imagine the fund making it through this mess.
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