T. Boone Pickens on Activist Investing: I'm a Shareholder Who Understands What Shareholders Want

T. Boone Pickens was very active in forcing energy company managements to focus on shareholder interests for a lot of his career.

Jul 6, 2014 at 1:28PM

T. Boone Pickens was an "activist investor" before anyone ever knew there was such a thing. 

Pickens recently sat down with Motley Fool contributor Jason Hall and talked about a wide range of topics. In the short video below, Pickens talks about how so many energy companies were led by largely shareholder-unfriendly managements and boards, and his efforts to change this behavior and put the focus back on the actual owners of the company. For more, check out the video, or read the transcript below. 

Warren Buffett bought nearly 9 million shares of this company
T. Boone Pickens isn't the only super-investor with his eyes on the American Energy Boom. Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock.

Jason Hall: If we could, I'd like to go back to something that I think a lot of people still don't necessarily know about your history as a business operator, and as an investor. Especially during the late '70s through the early '90s, some people called you a corporate raider. I think probably a better way to describe you is that you were an activist investor, before the term even existed.

I would like to hear your thoughts on, especially, the energy industry -- the differences in management today, versus the things that you saw in terms of management; how they would operate businesses from the view of the best interests of the shareholder. How do you think that's changed?

T. Boone Pickens: Well, when I started, I did the United Shareholders Association. It was August of '86, and that's after I'd been through years of managements that really did believe they owned the companies, and did not consider the shareholders.

Hall: These were often managements that had very little personal stake in the business, in many cases.

Pickens: Oh, I looked at proxy material and annual reports, and everything else, and you'd see where somebody who was a director of a company owned 100 shares, and 500 shares was pretty common, but thousands was very uncommon to see them.

When we tried the Gulf deal in '83, the CEO of the company had been there 35 years, and he owned 23,000 shares. I said, "Please, Mr. Lee, where do you invest? It's not in Gulf Oil. You're putting your money someplace else."

I knew him well, and it infuriated him. He said, "I don't like for you to say that."

I said, "But it's true."

Well, he said, "I don't have much money in Gulf Oil."

I said, "Why not? You're running the company. Does it have a future? Is it a good investment? How can you ask other people to buy Gulf, when you don't buy Gulf?" I'm sitting here with several hundred million dollars invested in Gulf, so I am a shareholder that understands what shareholders want. They want the price to go up.

The value of Gulf Oil on John S. Herold was $80-$90 a share, and the stock had been in the low $30s for 20 years.

When we first started buying Gulf, it was $30, and when the company -- then, we caused it to happen. I wish we'd been able to take it over. I think I could have done a very good job of developing the assets of Gulf and had it go to the market. I think it would be reflected in the market.

Well, we weren't big enough to take it over. It was a $13 billion acquisition, and Chevron made the purchase, so we kind of pushed Gulf to Chevron. We made a lot of money out of it. We made over $800 million, our group did, in it, which was a lot of money at that point. It was a $13 billion acquisition by Chevron; the largest at that point, ever, in corporate America. Gosh, there are $13 billion ones now ...

Hall: Just about every week you hear of something like that.

Pickens: Yes, there's another one -- and again, $100 billion; huge situation. We think, I do, that we were a part of that transition that developed in corporate America, but to call me a corporate raider -- and they said I was an asset stripper; I was going to take this company and bankrupt it.

Really? I'm going to make a $100-$200 million investment, and bankrupt the company? It doesn't make sense. Look at my record. Did I ever bankrupt anything? No, I never did. Why? But the media picked up on that. The PR that was protecting the corporate management, the lawsuits that came out of that, and everything else ... all of that was good for corporate America.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers