Hang Like a Bulldog
Boone Pickens no longer wears a tie. Herein lies a tale.
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CELEBRITY HANGS IN THE AIR almost forever. This is particularly true when that celebrity is connected with money. Even though it has been more than a decade since his daring raids on Wall Street landed his photograph on the covers of Time and Fortune and made his company millions of dollars, Boone Pickens on a recent Tuesday night was still a presence in a smart restaurant in Dallas. I saw necks stretched at odd angles as several other patrons strained for a look at him, and the waiters seemed positively flustered. In their confusion they referred to him as both Mr. Pickens and Mr. Boone.
At 69 Boone still looks fit and healthy, not so different from his glory days in the eighties. He was wearing a blue blazer and a white shirt with an open collar. “I never wear ties anymore,” he said at one point. At first I thought this small idiosyncrasy was an important sign of how the years had changed Boone, a personal statement similar to a priest’s refusing ever to wear his collar again. After all, the first time I met Boone he had given me a brief but intense disquisition about proper dress. It was 1982 in New York, and we were in a suite at the Waldorf Astoria. He was in the midst of his first takeover attempt, leading his small Mesa and its assets of $2 billion against the huge Cities Service and its assets of $6 billion. He said Texans shouldn’t come to New York to do business in boots. He always wore conservative suits and ties, “investment banker suits” he called them. “Look at you,” he said, pointing down at my black wing tips, “you know what I mean. You’re wearing investment banker shoes.”
But during our dinner, I changed my mind about his open collar. I decided that it was not a sign of change in Boone but of the change in the times. Boone could get away with not wearing a tie because nobody cared whether he did or didn’t. What Wall Street may or may not think of him wasn’t so important anymore. And Wall Street, for its part, didn’t seem to be thinking much at all about Boone, tieless or not. And maybe the world outside Wall Street wasn’t thinking about him either. “‘Boom’ Is a Four-letter Word” (see page 82) shows how much our economy has changed in the past decade, led neither by oil and gas men nor by corporate raiders. Boone was an oil and gas man and a corporate raider.
In the past year he had lost control of Mesa, the company he had founded in 1956 and run for the next forty years. After the announcement of his departure, Mesa’s stock rose. As if that weren’t enough, he was in the middle of a nasty divorce from his second wife, Bea, whom he had married in 1972. She was with him during his audacious deals in the eighties and is almost as vivid a character in his autobiography, Boone, as he is. His children were grown, and he lived in a townhouse in Dallas, where he had moved in 1989 after living most of his life in Amarillo. How did he feel about his life now when all he had worked for was not only past but gone, and not only gone but glad to be rid of him? But reflecting on himself is not Boone’s strong point. “I was ready to leave Mesa,” he said. “Two or three years ago I thought it would be hard to leave. But in early 1996 the chief operating officer left, and I took over everything. Eight managers reported to me, and I secretly thought that God did that because after three months of eight managers reporting to me, I was ready to go. I was reading late at night what I didn’t really want to be reading. But I had to, because they wanted to talk to me the next day and I had to be ready. The transition was easy, one hundred percent pleasant as far as I was concerned, and I think the new man felt the same way. Now I miss the people but not the job.” So much for forty years.
He has two new businesses, trading in natural gas contracts and a fueling company operating mostly around Los Angeles. Mesa had had a trading division that Boone was able to bring with him at the end. “I got to take what I wanted,” he said, “and leave what I didn’t.” He spends a lot of time studying weather patterns in the South Pacific—“That’s what affects the El Niño event”—to determine if weather in the United States will increase or decrease demand for natural gas. He watches gas production in the Gulf of Mexico and the condition of nuclear power plants. If a plant is forced to close for maintenance, demand for gas will go up. Thus, he reads constantly, although it is never anything but charts, reports, and the like. “I haven’t read a book in years,” he said. And when the market is open, he checks it constantly. “I take a cellular phone when I play golf so I can call about the market. My friends know I play better that way. Otherwise I worry too much.” When I told him that two years ago I had spent a month in a foreign country without seeing any newspapers or television in English, he looked at me in stunned disbelief and was for a moment even at a loss for words. “You must not be in the market,” he said finally and, I must admit, accurately.
His research is thorough and complicated, but his trading style is simple enough. He makes a decision and sticks to it. “I’m not a day trader,” he said. “We have our own technique, and it has been good to us. I have to get in rhythm and stick with my rhythm. If the fundamentals are there, you just hang like a bulldog and hope I haven’t screwed up my analysis.”
For all his reputation as a raider and a renegade, hanging like a bulldog describes Boone’s way of doing business almost perfectly. He built his company by hanging like a bulldog, and he lost his company doing the same thing. Mesa grew as most energy companies did through the seventies. Then in the eighties, when energy prices collapsed, Boone began making takeover plays on Wall Street. He arrived to almost universal disdain. During his first play, a Wall Street pro said, “There are only twenty people in the whole country who know how to do a deal like this, and Boone Pickens isn’t one of them.” But Boone hung on. He never succeeded in actually taking over another company, but he always bought considerable stock in his target, and when his threats pushed the stock price up, he was able to sell at a large profit. In his attack on Gulf Oil, he bought stock at $40 and sold at $80. None of this was accomplished without risk. It’s forgotten now, but Boone was risking Mesa in these plays. A misstep, a miscalculation, a savvier opponent that Boone couldn’t handle, and Mesa itself would have been taken over and Boone would have been out on the street. Perhaps losing his company now hurts less because he has always been willing to risk losing it.
He believed himself to be a force for the general good since everyone who owned stock, often retirees and pensioners, benefited from a higher price. He combined his raids with a masterful and instinctive public relations effort. He said he was warring on the lazy or ineffective corporate managers who seemed to think they owned the company themselves rather than the stockholders, managers who cared more about their own salary and perquisites than they did about the best interests of the stockholders. He ridiculed top managers who had little or no stock in their own companies. Meanwhile, he maintained a huge position in his own company. It was a message the country was ready to hear for the simple reason that Boone was exactly on target. As late as 1987 he was a frequent and popular speaker at conventions, conferences, and fancy dinners. It was always the same message and he hit hard. At one otherwise enervating conference, I heard Boone describe the head of one oil company as too old and out of touch to be effective. “He’s so old,” Boone said, “he shouldn’t buy green bananas.”
But then he lost his touch. He got into a vindictive fight with the newspaper in Amarillo, where he had lived more or less tranquilly since boyhood. As the chairman of the board of regents of West Texas State, he backed an unpopular president, who was a Boone sycophant. Later takeover attempts fizzled, and he lost the ability to take the high ground of rooting out incompetent management. He moved Mesa from Amarillo to Dallas in 1989 and cast aspersions on the town he’d left behind. Worst of all, Mesa was in trouble. The situation was complicated, but the essence was that Mesa was deeply in debt and could get out only if the price of natural gas went up. Boone believed it would. “My IQ is the gas price,” he told this magazine in 1995. “At $3 I’m a genius. At $1.50 I’m a moron. Don’t talk to me too fast; it’s at $1.53 today.” At the same time, he was making generous dispersions to his shareholders, which was the basis of his business philosophy. He hung in with gas and he hung in with the dispersions and he was wrong on both counts. The price of gas didn’t go up. “We distributed $1.2 billion to shareholders,” he told me, “and the debt was $1.2 billion. If I had it to do over, I would have distributed half. I thought I was right to distribute the whole $1.2 billion, but I wasn’t right at all.” In the end he was able to get new financing to save the company but only at the expense of leaving. “But I stayed with it the whole way,” he said. “I took a $125 million hit myself.”
He thinks American business is much better off today because the management is better: “Today if a manager doesn’t survive a deal, he can go somewhere else. Back then, if they lost the job, they wouldn’t be in demand. Today there’s not one in one hundred who doesn’t check their stock price at least once a day. Back then, a lot didn’t check the price once a month.”
That seems to be his legacy. Some are not as sure as Boone that the concentration on stock price is entirely a good thing, but he can more than hold his own in any debate on the subject. Other than that, he is a man who is used to making a decision and risking his company to see if he’s right. He’s also a man who risked the company once too often, which only meant it was time to move on and start something new. “I started Mesa in September 1956 and I left in September 1996, so that seemed just about right,” he said as we were finishing. As we left, he reached for a tip as the valet parkers rushed in a frenzy to bring Mr. Boone his car.