Investing With Energy's Billionaires
Sep 28th 2012 2:27PM
Updated Sep 28th 2012 2:28PM
Quite often, the leaders of our energy companies make quite a bit of money. However, just because the leader of your company has been wildly successful, doesn't mean that particular company is worth investing in. Today we'll take a look at four energy industry billionaires and the companies they run to see which, if any, present compelling investment opportunities.
After news of Aubrey McClendon's latest round of egregious misdeeds at Chesapeake Energy (NYS: CHK) broke in April, shares plummeted. McClendon has a long history of disreputable tricks on and off the company's balance sheet, and Reuters had a field day (or two or three) shedding some light on his activities.
Despite activist investor Carl Icahn picking up a large stake, the stock is still down close to 20% year to date. Chesapeake owns some of the best assets in the energy business -- trading for about $19.00 at a P/E of 6.32, it is the equivalent of buying something on sale with a coupon. My mom taught me to love a deal like that, but investors have every right to be wary as long as McClendon is at the helm.
The frugal opportunist
Richard Kinder runs a tight ship. Kinder Morgan (NYS: KMI) , Kinder Morgan Energy Partners (NYS: KMP) , and Kinder Morgan Management are all proud of the fact that they're managed "by shareholders, for shareholders." Built from the ground up, the trio's asset footprint is remarkable; facilities for storage, processing, and treatment abound. Pipelines for natural gas, petroleum, petroleum products, and carbon dioxide stretch across the U.S. and up into Canada.
Richard Kinder has built Kinder Morgan into the third-largest energy company in the U.S. by enterprise value. KMP and KMR have existed longer than KMI, which went public in 2011, and have an excellent history of returns. Last year, KMP returned 29%, KMR 26%, and KMI 11%. Not bad. The best part, however, is that Kinder does it all for $1 a year.
The music lover
Kelcy Warren, the CEO of Energy Transfer Partners (NYS: ETP) , holds a music festival in Texas every year, but somehow still manages to keep such a low profile that when he donated millions of dollars to name and maintain a park in Dallas, city officials -- including the mayor -- had no idea who he was.
Soft-spoken and focused on his business, Warren also insists on a $1 annual salary and is committed to bringing the partnership to the next level. For a brief moment earlier this year, before the Kinder Morgan/El Paso deal supplanted it, ETP was the largest natural gas pipeline network in the nation. Under Warren's tutelage, the partnership has been growing at a rapid pace is on the verge of what most analysts predict is a return to distribution increases.
The man with the plan
T. Boone Pickens' baby, Clean Energy Fuels (NAS: CLNE) , has had a mixed year. Up spectacularly in May, the stock has since come back to earth and is currently up a very modest 1.8%. But Clean Energy Fuels has also spent the better part of this year building out its network of natural gas refueling stations. CLNE plans to have about 360 total stations up and running by the end of this year.
If you believe that natural gas will continue to be a disruptor in the transportation market -- there will be 123,600 natural gas vehicles on the road by the end of the year -- then you might want to take a long look at the first mover in the nat-gas fuel center industry.
Of the four billionaires we discussed today, I like Richard Kinder and Kinder Morgan the best. The "shareholders first" attitude is hard to ignore, and the company is positioned quite nicely to reap the rewards of America's natural gas boom.
Clean Energy Fuels is an interesting play to watch as well though, and I encourage energy-minded Fools to follow it. The movement toward alternative energy is gaining momentum, and one potential opportunity in this field is Clean Energy Fuels, which focuses its natural gas efforts primarily on trucking and fleets. It is poised to make a big impact on an essential industry. Read all about Clean Energy Fuels in our brand new report, and receive a year's worth of analyst updates. Just click here to get started.
The article Investing With Energy's Billionaires originally appeared on Fool.com.Fool contributor Aimee Duffy holds no position in any company mentioned. Click here to see her holdings and a short bio. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy. The Motley Fool owns shares of Clean Energy Fuels. Motley Fool newsletter services have recommended buying shares of Kinder Morgan and Clean Energy Fuels. The Motley Fool has a disclosure policy.
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