Trading Legends Edition: The Lasting Impact of T. Boone Pickens, Ep #64
Thomas Boone Pickens Jr. (more commonly known as “T. Boone Pickens”) was born May 22, 1928, and died September 11, 2019. He was a notable business magnate and investor, most well-known for his position as the founding member of the hedge fund BP Capital Management. He’s also been coined as a takeover operator, corporate raider, and greenmailer. He made his money in energy and oil fields, eventually passing away with a net worth of $500 million. He was one of the most influential business people of our time. What can we learn from his life? Find out in this episode of How To Trade It!
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You’ll want to hear this episode if you are interested in…
- [2:34] T. Boone Pickens birth + childhood
- [12:33] Why awareness is key to profitability
- [18:00] Founding Mesa Petroleum
- [23:15] Boone’s move to Wall Street
- [29:10] The transition from Mesa to BP Capital
- [32:09] T. Boone Pickens legacy
T. Boone Pickens: learning lessons from childhood
Boone Pickens was born in Holdenville, OK. His father was an oil and mineral landman, someone who performed services for oil and gas exploration companies. This provided Boone with early exposure to geology, minerals, and oil fields.
At the age of 12, Boone delivered newspapers. He expanded his route from 28 deliveries to 156. How did he do it? By picking up routes from other boys who got tired of the work. It was an early introduction to expanding quickly by acquisition—a practice he favored later in life. He had a natural inclination for growth. No one told him he could do this, he just created the opportunity for himself. Boone once said, “On a scale of 1–10, my ambition is probably an 11 or a 12.”
Question for consideration: What causes some people to be so passionate and others to be so indifferent? Let me know your thoughts!
Pro Tip: What will help you in your trading? Learning everything about what you’re investing in. If you know what an asset is worth and you’re familiar with the market, it’s easier to recognize a good opportunity and act on it when it happens. Most traders will tell you that they make their luck by finding the right places to be and remaining vigilant. Boone’s knowledge of the oil industry helped him make great deals as time went on.
From Phillips Petroleum to founding Mesa Petroleum
Boone graduated with a degree in Geology in 1951. His first job out of college was at Phillips Petroleum, where he worked for three years. Boone hated working for Philips. His wife told him to quit—so he did.
He went out on his own in 1954 as a Wildcatter. A wildcatter is a small oil and gas exploration outfit, looking to strike it rich (almost like a gold miner). They target areas known for having oil deposits. Wildcatters made a lot of money. Pickens was in the right place at the right time.
Boone went on to found Mesa Petroleum, which eventually became America’s largest independent oil operator. The company was eventually bought out, and now publicly trades as Pioneer Natural Resources. It’s all a result of Boone’s skills, hard work, determination—and continued growth through acquisitions. From 1956–1981 he grew his company significantly—but he wasn’t done yet. In 1981, he made a strong pivot.
A hard lesson: Boone was similar to Jesse Livermore because he worked hard and it took a toll on his family. Boone was married five times and his kids remember him as an absentee parent. There was no work-life balance. It’s a good reminder that work alone can be a lonely business. What will success cost you? Is becoming a billionaire businessman worth the cost? I would rather have a relationship with my children than endless success. Respect and admiration aren’t the same as a relationship.
How did T. Boone Pickens transition from his first job at Phillips Petroleum to founding Mesa Petroleum? Learn more about his life and legacy in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading… Click To Tweet
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Boone’s move to Wall Street
When the 80s hit, Boone moved to Wall Street. He entered the spotlight and made huge publicity on the deals he made. He tried to buy out City Service, Gulf Oil, Phillips Petroleum, and Unicom. He led Mesa to two successful acquisitions (Pioneer Petroleum and Tenneco). He became well-known to the general public after the gulf oil takeover. Time Magazine put him on the cover of the March 1985 issue.
Boone became a corporate raider and a greenmailer. A corporate raider engages in hostile takeovers, by either controlling their policies or reselling them for a profit. They do this by buying 51% of the company. Greenmailing is the practice of buying up shares of a company while threatening a takeover to force corporate executives to buy the shares back at a premium. He always had his shares bought out—he never actually became a corporate raider.
He researched and studied the companies he did this to. He liked to say that he knew more about these companies than they knew about themselves. He spent months with a massive team of people preparing for his moves. He was quoted saying, “I always saw myself as a large stockholder trying to make a difference. I wasn’t raiding anybody.” He saw that the companies were inefficient and felt they didn’t care about their shareholders. He wanted to make sure these companies improved.
The transition from Mesa to BP Capital Management
In 1996, Boone sold Mesa, which ended his 40-year run as the CEO. But he didn’t end there and in 1997 he started BP Capital Management, a hedge fund. They used capital to leverage his knowledge, his experience, and his network. This firm became well-known for its committed workforce. After being open for 9 years, they earned $990 million from his equity in two funds and an additional $120 million from his shares of the 20% of the fees applied to the fund profits. BP Fund Advisors was formed in 2013, offering the investing public a found vehicle to invest alongside T. Boone Pickens.
Boone demonstrates the power of one—one person can change the world, one way or another. Everything you do has value and impact. Learn more about the legacy he left behind in this episode of How To Trade It!
Are there any legends that you want to learn about? Any guests you’d like me to invite? Let me know at business(at)tradingstrategyguides.com!
Many people know T. Boone Pickens as the founder of BP Capital Management. But he had an entire life before his hedge fund days. Learn all about it in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading… Click To Tweet
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