March 11 (Bloomberg) -- Billionaire investor Boone Pickens's BP Capital Energy Equity Fund fell 14 percent in the first two months of the year amid soaring prices for natural gas and crude oil.

BP Capital spokesman Jay Rosser, who said in an e-mail that the fund dropped, declined to comment on the hedge fund's specific market positions and holdings.

Pickens, the founder and chairman of Dallas-based BP Capital LLC, told CNBC on Feb. 21 that he was short on both crude oil and natural gas. He didn't provide additional detail on his positions. A short is a bet that prices will decline.

``He's just a little premature, maybe,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``I think he's right. The market is soaring to unprecedented heights on wings of whimsy.''

Crude oil futures touched a record for a fifth day today, climbing above $109 a barrel in New York, after the weak dollar prompted traders to invest in commodities. Natural gas declined after touching the highest level in almost two years.

``Oil is going to back off here in the second quarter,'' Pickens said in the CNBC interview last month. ``It'll be back above $100 in the second half.''

About 90 percent of the Energy Equity Fund's assets are in energy-company stocks, with the remaining 10 percent in oil and gas commodities, according to Bloomberg data. Natural gas futures jumped 25 percent on the New York Mercantile Exchange through February, as crude oil climbed 6.1 percent.

Focus on Stocks

``Boone Pickens is not good at calling the long-term market, but he's got a pretty good head for the short-term,'' Lynch said, citing Pickens's past successes, including hedging production at his Mesa Petroleum in the mid-1980s before prices collapsed and taking a short position on natural gas after Hurricane Katrina in 2005.

Pickens started the BP Capital Energy Commodity Fund in 1997 to track energy markets and the Energy Equity Fund in 2001 to concentrate on stocks. Rosser didn't immediately respond to a question about the commodity fund's performance, though he said it's the smaller of the funds.

The Standard & Poor's 500 Energy Index fell 5 percent in the first two months of the year.

``Energy stocks took a beating in January and were down 10.9 percent,'' said Howard Silverblatt, senior index analyst with Standard & Poor's. ``In February, they rebounded 6.66 percent, but that basically left them nicely in the red through February.''

Fund Holdings

BP Capital's biggest equity holdings as of the end of last year were in Suncor Energy Inc., Exxon Mobil Corp. and Occidental Petroleum Corp., according to a regulatory filing. Suncor's shares lost 5.1 percent through February, and Exxon Mobil dropped 7.1 percent. Occidental rose 0.5 percent.

Suncor shares have fallen amid increases in the cost of processing heavy oil and operating difficulties, said Tina Vital, an analyst at S&P in New York.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

Last Updated: March 11, 2008 17:49 EDT