Tuesday, July 15, 2008

Following an Insider Buyer

Even if you only casually watch television, you have probably seen the promotional spots featuring T. Boone Pickens making his pitch for a green economy. Pickens has fronted some pocket change ($40 million to $50 million) to finance an ad campaign hinting at some sort of alternative energy program to solve the so-called oil crisis.

At the first meeting the Pickens Plan (yes there is a web site) is seductive. Pickens wants to reduce our dependence on foreign oil. Coming from successful oil man, words like that carry some weight. For consumers, some of whom have to choose between feeding the kids and putting gas in the car to go to work, it has to be music to their ears.

Pickens talks about the U.S. addiction to oil that has led to an extraordinary dependence upon oil imports. Then he declares the U.S. as the Saudia Arabia of wind power. He advocates cheap replacements for foreign oil such as natural gas and biofuels. It is a simple pitch.

The Pickens Plan web site provides a few facts and figures to support the argument. Mostly the site is looking for supporters with large icons asking for visitors to “Share the Plan” and “Push the Plan.” The Pickens Plan web site uses every social networking, blogging, messaging, and web feed technology available to get visitors to plug-in and recruit their friends.

Pickens also wants citizens to rally together, beginning next week on July 21st with a nationwide phone call and e-mail campaign to elected officials, with the message that “WE WANT CHANGE NOW!” (caps provided by Pickens). There are also a series of rallies, house-parties and meet-ups for those who want more than a virtual experience to this very real economic problem.

Long a Democrat, Pickens says he is ready to give up partisan politics to get something accomplished. Even that has a enticing ring for Americans tired of the back biting and in-fighting that has characterized every effort to put reason into a national energy policy.

In reviewing the Pickens Plan web site and reading a few press interviews, I expected a bit more disclosure - the kind of disclosure that analysts like me are accustomed to providing when pitching stock ideas. Yet Pickens never mentions that, as a shareholder, he has much to gain from promoting – guess what - wind, natural gas and biofuels. (Now you know why those words were underlined above.)

Yes, T. Boone Pickens “has a beneficial interest” in all the industries for which he wants Americans to “Share the Plan” and “Push the Plan.” Not that such investment interests invalidate his argument. Indeed, in my view the fact that Pickens has some “skin in the game” makes his business case for alternative energy and domestic gas production even more credible. Pickens did not become a billionaire by putting money into losing propositions. This make Pickens the ultimate insider buyer to follow.

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