Icahn Wagered $1 Billion on Energy Stocks During BP Oil Spill

[Donnachaidh]

http://www.bloomberg.com/news/2010-08-09/icahn-hedge-funds-wagered-1-billion-on-energy-stocks-during-bp-oil-spill.html

Financier Carl Icahn disclosed that his hedge funds invested almost $1 billion in energy stocks during the second quarter as they were pummeled by declining crude prices and the worst oil spill in U.S. history.

Icahn plowed about $929 million into energy stocks in the period, bringing the total to 18 percent of the hedge-fund group’s stock investments, according to a regulatory filing last week. The energy bet helped the funds record an 8 percent gain in July, when oil stocks rebounded, Icahn’s holding company said in an Aug. 4 statement.

Icahn, who has a 30-year history of investing in energy companies when they trade at a discount to the value of their oil and gas reserves, bought the stakes as the April 20 explosion of BP Plc’s Macondo well pushed prices lower. The Standard & Poor’s index of major oil and gas exploration companies declined 12 percent during the second quarter. It has since rebounded 10 percent.

“Carl has often said he could buy oil cheaper on Wall Street than at the wellhead,” said Russell Glass, who served as president of Icahn Associates during the 1990s, when the billionaire was acquiring stakes in small exploration and production companies. “He has a very keen sense for intrinsic value in the energy space,” said Glass, who now runs RDG Capital LLC, a New York-based hedge-fund group.


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