Baltimore power producer and trader Constellation Energy Group Inc., which agreed to sell out to Berkshire Hathaway Inc., isn't the only one who has been burned on volatile oil and gas prices. The Wall Street Journal reported Wednesday that a commodity fund run by 80-year-old oil man-turned corporate raider-turned energy investor T. Boone Pickens is down 84% and a hedge fund that invests in energy stocks run by him is down 30%, both through August. That comes to $1 billion in losses, including $270 million in personal losses for Pickens.
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"It's my toughest run in 10 years," Pickens told the Journal. "We missed the turn in the market, there's nothing fun about it."
Until recently, everything was coming up roses. His energy stock fund has returned a compounded annual return of 37% over seven years, according to the Journal, which cited an unnamed investor, and the commodity fund has done similarly well. Pickens blames the recent falloff in energy prices to dislocations in financial markets, which forced a range of investors to sell their holdings to raise cash. "I'm not willing to accept that [the downturn] was due to a global slowdown," he told the Journal. "When there's deleveraging in markets it will affect everything."
Ever the optimist, Pickens expects oil prices to resume their upward trajectory, unless, of course, there's a deep global economic downturn. He's expecting oil to finish the year at $120 to $125.
Pickens is still pitching his energy plan across the country, the one that proposes replacing natural gas-fired power plants with wind farms and then using the natural gas to fuel the U.S.' transportation needs. He spoke at the National Press Club on Monday, calling upon both presidential candidates to come up with their own plan to reduce the country's dependence on foreign oil, and he is scheduled to speak at the University of Michigan on Oct. 1. His new book, "The First Billion Is the Hardest," is out in bookstores. Make that "The First Billion You Lose Is the Hardest." - Claire Poole
