Pickens plans Canada energy fund

David Milstead, The Globe and Mail
November 06, 2009

U.S. energy magnate T. Boone Pickens plans to give Canadian investors a chance to piggyback on his investment strategies – for a price.

Pickens, in conjunction with BMO Nesbitt Burns, has filed a prospectus for the T. Boone Pickens Energy Fund.

The closed-end fund will have an investment strategy “substantially similar” Mr. Pickens' BP Capital Energy Equity Fund, according to its prospectus. It will focus on highly liquid energy stocks and commodities, taking both long and short positions, and using up to 30 percent leverage to goose returns.

Pickens has recently agitated against the United States' importation of oil and advocated alternative energy forms. But the new fund makes no promise of being exclusively clean or green – it says stocks in its target space include those of drillers, exploration and production companies, and refiners.

BP Capital Energy, Pickens' model fund, has had a compound annual growth rate of 20.2 percent before fees – which cut the return to investors to an annual 10.8 percent.

Investors in the new Canadian fund can expect to turn over a significant share of profits as well.

BMO Nesbitt Burns, as the administrator, will collect 2 percent of the fund's net asset value each year as a fee. It will then pay Pickens' investment team, TBP Investments Management, from the proceeds.

If the fund increases its net asset value over the course of the year, 20 percent of the gain goes to BMO Nesbitt Burns and the Pickens investment team.

Upfront sales fees and other expenses will further reduce the initial value of the fund.
Each $10 “combined unit” comes with a unit in the fund, plus a warrant to purchase another. Pickens says he intends to own 10 percent of the fund.

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