By Rachel Adams-Heard
BP Capital, a spinoff of Pickens’ shuttered hedge fund, launched the oil ETF just last year, offering investors exposure to companies that benefited from a rise in global crude prices. Brent oil futures are down about 15% in the last year while BP Capital’s ETF, which trades under the ticker BOON, is down almost 20%.
Meanwhile, both the WilderHill Clean Energy Index is up 19% in the past 12 months and a Bloomberg Intelligence index of large solar companies is up 1.7%.
The revamped ETF, which will trade as RENW, is based on an index of companies that derive “significant revenue” from renewables or meet a large portion of their energy needs from renewable sources. BP Capital isn’t totally giving up on petroleum — the firm will continue to offer a pipeline ETF, for example.
Though Pickens rose to fame as a corporate raider in the 1970s and 1980s, he earned much of his wealth from bets on the direction of energy prices after turning 75 in 2003. This is not the first time Pickens, who indirectly controls BP Capital’s investment adviser, TriLine Index Solutions LLC, has championed renewables: the 91-year-old unsuccessfully sought to build the world’s biggest wind farm in the Texas panhandle.
With crude supplies booming, demand “questionable” and electric vehicles ramping up, “do you have one last hurrah for oil prices or is it just never going to happen?” Loftin said. “I think that backdrop is going to always keep the energy space in general muted in terms of returns.”
Energy’s role in the S&P 500 Index has plunged to just over 5% now from almost 11% as recently as 2014.
“There’s a set of specific reasons why that’s the case, and it’s not going to go back to 13%, unless they can generate cash,” Loftin said. “The puck is heading toward renewables.”