Oil legend T. Boone Pickens confirmed Wednesday that his BP Capital hedge fund lost $2 billion in the global market crash. The decline set off a rush of redemptions, according to sources, and Pickens lost half his investors.
The fund is now all cash, and Pickens says he is in no rush to buy back stocks.
“We still are in cash,” Pickens told CNBC. “We’re going to make it back, but I think now patience is what we are practicing.”
The energy-focused fund’s huge loss followed five years of gains and annual returns that reached as high as 119.5 percent in 2003, due largely to the commodities boom.
Despite being ahead of the curve on commodities, Pickens now thinks the global collapse will punish stocks more.
“We think it’s going to get worse and there’s going to be better opportunities,” Pickens said.
As for his cash position, “we may take away a little bit, but we’re not going back into the market for awhile,” he said.
Pickens also predicted that oil would soon return to $100 a barrel. He had predicted earlier in the year it would hit $150 — which oil did in July — but the figure proved unsustainable as big college endowments and hedge funds scrambled to undo long bets on oil.
Oil now trades well under $60 a barrel, despite recent OPEC cuts.
“A global recession changes all my numbers, no question,” Pickens said. “We’ve got to be close to a bottom, because OPEC is going to cut supply and support the price.”
“I think you’ll see within a year from now we’ll be back above $100 a barrel.”
Merrill Lynch CEO John Thain says he doesn’t see a quick recovery for the global economy.
In fact, things now resemble 1929 more than not.
"We are going to be in a very difficult economic environment for a significant period of time," Thain told an audience this week.
He said the U.S. economy "is contracting very rapidly," creating uncertainty "at least over the next few quarters."
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