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T. Boone Pickens Closes Energy Hedge Fund

The Law Office of C. William Smalling, P.C. Jan. 27, 2018

T. Boone Pickens recently announced in a Linkedin post that he has closed his energy hedge fund. What this means for the energy futures market remains to be seen. Meanwhile, if you are involved in energy drilling or transactions, speak to our experienced oil and energy contracts  attorneys.

The End of An Era

The oil tycoon said that oil trading “has lost its luster.” He intends to invest his time and energy promoting entrepreneurship and pursuing philanthropic and political endeavors. Although his claim to fame came by way of takeover bids in the 1970s and 1980s, Pickens earned much of his wealth, estimated to be about $950 million, in the energy futures market. He made millions through his Dallas-based BP Capital LLC by correctly predicting rising oil and gas prices.

Pickens said he will continue to be an owner and investor in the TriLine Index Solutions energy index series and the BP Capital TwinLine Energy Fund. Pickens is not alone in closing his fund as a number of hedge funds have closed in recent years. In 2017, 66 more firms closed than started, according to data compiled by Eurekahedge.

Pickens Declining Health

Pickens also cited health issues as being a factor in his decision. He is recovering from a series of strokes suffered late in 2017 and a fall last summer.

“It’s time to start making new plans and setting new priorities,” he said.

At the start of 2008, Pickens was managing $4 billion in assets. Then as the energy markets declined, one of his funds was nearly wiped out while a second plunged by 64 percent. Nonetheless, he pressed on by seeking new investors for new funds that invested in stocks and futures. By the end of 2016, BP Capital Fund Advisors managed over $335 million in assets.

The Takeaway

Some observers noted that Pickens may have closed his fund due to diminished volatility in energy markets, which means it’s not as lucrative. Over the years, Pickens has also made significant investments in wind energy in an effort to end the U.S. dependence on Middle East oil.

Meanwhile, energy production in the U.S. continues to grow dramatically due in large part to improved hydraulic fracturing techniques as OPEC producing countries continue to impose production caps. These and other factors will likely continue to lead to price stability in the energy markets.