High profile investors pile into natural gas companies

Several well known investors are betting on natural gas, according to Reuters in Analysis: Billionaires' bet on gas; brilliant or backfire? 

Carl Icahn, T. Boone Pickens, and Wilbur Ross have all placed major bets on natural gas companies.
Reuters: Icahn in December more than doubled his stake in Chesapeake Energy Corp, the second-largest producer of natural gas in the United States behind Exxon Mobil Corp.

Pickens is backing a buyout led by EXCO Resources Inc Chief Executive Doug Miller, who is pursuing a $4 billion management-led buyout of the gas producer.

Ross has steadily raised his stake in EXCO to nearly 10 percent and is considering joining the buyout as well.

EXCO, like most other U.S. exploration and production companies, has invested in shale fields like the Marcellus and the Haynesville. Those fields contain so much gas -- some say shale holds more than 100 years' supply -- that it has tipped the supply and demand balance in North America and hurt prices.

It is interesting to note the different styles of these well known investors. While Pickens involvement is no surprise, as he made his name as a corporate raider and shareholder activist in the energy sector, the others are less known for their energy investments. When investors with different approaches like the same investments it suggests these companies are attractive for several different reasons, and other investor would do well to pay attention.

Below are excerpts from these investor's profiles on Wikipedia:

 Wilbur L. Ross, Jr. (November 28, 1937 –)[1] is an American investor known for restructuring failed companies in industries such as steel,coal, telecommunications, foreign investment and textiles. He specializes in leveraged buyouts and distressed businesses. In 2005, Forbesmagazine listed Ross as one of the world's billionaires for the first time.[2] He was ranked #346 on the Forbes list of the 400 richest Americans,[3] with an estimated net worth of $1.7B. According to a recent New York Times article,[4] he has been bottom-fishing in mortgages and mortgage companies. He apparently commands far greater sums than his net worth would suggest.

Thomas Boone Pickens, Jr. (born May 22, 1928), known as T. Boone Pickens, is an American financier who chairs the hedge fund BP Capital Management. He was a well-known takeover operator and corporate raider during the 1980s. With an estimated current net worth of about $1.4 billion, he is ranked by Forbes as the 290th-richest person in America and ranked 880th in the world.

Carl Celian Icahn (born February 16, 1936) is an American financier, corporate raider, and private equity investor. Icahn began his career on Wall Street in 1961. In 2010 his net worth was US$11 billion, making him the 24th richest American, and as of March 2010 the 59th richest man in the world. In 1968, he formed Icahn & Co., a securities firm that focused on risk arbitrage and options trading. In 1978, he began taking control of positions in individual companies.[2] He has taken substantial or controlling positions in various corporations including RJR Nabisco, TWA, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, Uniroyal, Dan River, Marshall Field, E-II (Culligan and Samsonite), American Can, USX, Marvel Comics, Revlon, Imclone,Federal-Mogul, Fairmont Hotels, Blockbuster, Kerr-McGee, Time Warner and Motorola.


Full Disclosure: At the time of this writing, I am long the energy sector in my personal and client accounts.