Pickens Said to Seek Investors for Hedge Funds After 79% Gain

Date: Friday, July 17, 2009
Author: Saijel Kishan, Bloomberg

T. Boone Pickens, the billionaire energy investor hit by losses and client redemptions in 2008, is raising money after his hedge funds gained as much as 79 percent this year, according to two people familiar with the matter.

Pickens, 81, met with potential investors in New York over the past two weeks, said the people, who asked not to be identified because the information is private. BP Capital LLC, his Dallas-based firm, is seeking to expand its Energy Equity Fund II, which invests in stocks and futures, and Energy Fund II, which trades futures only, they said. These are follow-on versions of funds that Pickens closed to new investors.

BP Capital, which manages about $500 million, had more than $4 billion at the start of 2008 before the original Energy Fund fell 98 percent and first Energy Equity Fund lost 64 percent, according to the firm’s marketing documents. Oil fell 54 percent last year, tumbling from a record high of $147 a barrel. Pickens sold investments, and in October lifted restrictions on client withdrawals.

“Investors are much more cautious now and prefer to invest with the managers who have not made headline stories last year,” said Vidak Radonjic, managing partner at Jersey City, New Jersey-based Beryl Consulting Group LLC, which advises clients on investing in hedge funds.

Jay Rosser, a spokesman for BP Capital, declined to comment.

2009 Returns

Energy Fund II, opened in February, will follow the same strategy as its predecessor, which started in 1997 and gained 79 percent this year through June, according to the documents. The Energy Equity funds, which oversee about $400 million, are up 14 percent.

Futures are contracts for delivery of a security at a specified time at an agreed price.

Hedge funds are private, lightly regulated pools of capital whose managers can buy or sell any assets, bet on falling and rising asset prices and participate in profits from money invested.

Pickens started his firm in 1997 with $36 million after running Mesa Petroleum Co., one of the world’s largest independent oil and gas producers at the time. He began trading energy contracts in 1986 while at Mesa, according to the documents.

Pickens typically holds his investments between three months and two years, according to the documents. He is the biggest investor in his funds, owning about 20 percent.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net;