|Investors Opting Out at BP Capital-Source|
October 28, 2008
Roughly half the investors in T. Boone Pickens' BP Capital
hedge fund have asked to withdraw their money after losses of about 60 percent
this year, a source familiar with the situation said on Tuesday.
The Texas oil tycoon and his investment fund, which had invested primarily in
the energy sector, have lost about $2 billion since peaking in late June, the
The source confirmed that Pickens had moved the fund almost entirely into cash a
few weeks ago to allow investors flexibility in riding out the volatility of
recent global market turmoil.
"He recognized early enough that others may need their money out for other needs
and waived withdrawal requirements," the source said.
In September, hedge fund managers globally said they were sitting on record
levels of cash to meet an unexpected flood of "I want my money back" notices,
after losses at the world's roughly 10,000 loosely regulated funds averaged 5
percent for that month alone.
Chicago-based performance tracking group Hedge Fund Research this month said
average 2008 industry losses have totaled 9.41 percent through September, with
energy and basic materials hedge funds down 20.84 percent this year.
Sources familiar with BP Capital's situation said losses at the fund, which
began in August 2001, were an aberration due to a worldwide economic collapse.
BP Capital's losses this year come after five years of gains, with annual
returns reaching as high as 119.5 percent in 2003 during the commodities boom
that began in 2002.
Pickens, who is also an advocate for alternative energy investment in the United
States, has said he will retool and is planning a comeback.
"I'll get it back," Pickens said on CBS network program "60 Minutes" on Sunday.
(Reporting by Chris Baldwin; Editing by Walter Bagley)