Let's focus on one hedge fund billionaire in particular: T. Boone Pickens' BP Capital.
SandRidge Energy Inc. (SD) is Pickens' top small-cap pick, sitting at the No. 10 spot in his portfolio. SandRidge has been a relatively poor investment over the past twelve months, but are up more than 13% since the start of the year. Much of the bullish sentiment behind shares of SD looks to be twofold. First, anticipation of the company's Q4 FY2012 financials-SandRidge has beaten the Street's top-line forecasts in at least five consecutive quarters-is likely in the minds of many investors.
More importantly, though, the stock has been lifted by SandRidge's battle with hedge fund TPG-Axon, which is seeking shareholders' approval to replace the company's existing board. Positive price action in recent weeks suggests that the markets are hopeful for a TPG-Axon victory, which would support the notion of a move to stimulate value creation.
In the hedge fund's letter to SandRidge shareholders, TPG-Axon cited a number of reasons why investors should sign its consent card. The most notable are: (1) poor performance since SandRidge's 2007 IPO, (2) the "worst credit rating" amongst its peers, (3) an inability to "focus" on one strategic initiative, (4) a "wasteful" cost structure, and (5) above-average executive compensation.
From a valuation standpoint, SandRidge trades at a mere 5.2 times cash and 1.3 times book, which is below notable peers like Anadarko Petroleum (APC) (15.7x, 1.9x) and EOG Resources (EOG) (30.8x, 2.5x). Still, TPG-Axon argues that this discount is for a reason, and believes that its proposals are the only way that shareholders can achieve fair value. Joining T. Boone Pickens in SandRidge is a host of other mega-hedge fund managers, including Prem Watsa and Steven Cohen (check out Cohen's favorite stock picks). It remains to be seen how this battle will play out, but it's clear what side Mr. Market is betting on.
No disrespect intended re; Boone, but his foray into wind farms green energy has been a $2 billion disaster. and, his CLNE has yet to make a dime..More important to me is the long position Leon Cooperman maintains..This stock is drama personified..The question still remains: What is this pig worth given the extensive destruction the thief Ward has wrought ??? I'm still long..But, the Miss lime doesn't seem all that promising..A roll of the dice here, that's it..