BP Capital Drops in July

BP Capital, the hedge fund run by famed investor T. Boone Pickens, suffered a 35% drop in the commodity half of its fund in July, according to a recent report in the New York Post. The article goes on to further claim that the fund has dropped 10% in 2008.

The biggest factor in the large drop? The plummeting prices of oil and natural gas. Many of these types of funds have made an absolute killing in the past few years as commodity prices have soared. With oil quickly coming back down to earth (for how long, who knows), it shouldn't surprise you to hear many more stories about commodity-focused hedge funds taking a beating in July.

BP Capital controls roughly $7 billion in assets, half of which belongs to T. Boone Pickens. There are two funds operating within BP Capital - the BP Capital Commodity fund, and the BP Capital Equity fund. It stands to reason that the commodity-focused fund would take a drubbing with commodities quickly dropping in price.

This has not been a great month for Pickens. Pickens announced in late July that he had dumped his entire stake in Yahoo (10 million shares) at a loss, after the company wasn't able to put together a deal with Microsoft. My best guess is that Pickens likely dropped somewhere in the neighborhood of $40-$50 million dollars on the trade.

Don't feel too bad for BP Capital and its investors - given the parabolic rise in oil prices over the past few years, I am sure that they have made out like bandits. I'd be interested to know whether or not the company is making any adjustments to their portfolio given the recent pullback in oil.


Filed under: Hedge Fund News | The Economic Meltdown | General Market News