Richard Rainwater turns bearish on oil. For now

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Billionaire investor Richard Rainwater has turned bearish on oil. Only temporarily bearish, mind you, but it still struck me as big enough news to write my column about this week. It’s not online just yet (update: now it is), but in the interest of serving this blog’s readers with the freshest possible news (and because Time‘s PR folks are about to start flogging the story), here are the basics:

Rainwater made his name managing the investments of the oil-rich Bass family of Fort Worth in the 1980s, steering them most famously into Disney stock when Disney absolutely was not cool. Then he struck out on his own, bankrolled the creation of hospital rollup Columbia Healthcare (which merged with HCA, after which some bad stuff happened, but let’s not get into that here), and married Darla Moore (famously christened by Fortune as the “Toughest Babe in Business“). Then, in about 1997, he became convinced that oil prices would start rising soon, and committed much of his fortune to betting on that rise.

That bet has paid off to the tune of about $2 billion, a success that has been documented in detail in the pages of Fortune not once but twice.

I was working on a column on whether the price of oil has gotten ahead of itself or not, I remembered those Fortune stories, and I thought it might be interesting to hear what Rainwater thought of all the talk of an oil bubble. I asked Oliver Ryan, author of the most recent of those articles, to introduce me. Oliver called Rainwater, and reported back that Rainwater had something pretty interesting to tell me.

That he did. “I sold my Chevron,” he said in the first few seconds of our phone conversation. “I sold my ConocoPhillips. I sold my Statoil. I sold my ENSCO. I sold my Pioneer Natural Resources. I sold everything.”

Rainwater did this, he said, right after the price of oil passed $129 a barrel, which happened on May 20. He did it because he thinks oil demand is headed down in the U.S. as Americans change their habits in reaction to $4 gas. He remains a believer in peak oil; he just thinks prices have risen so much that we’re due for a significant correction–after which he’ll start buying into oil again.

Interestingly, Rainwater does not buy into the argument that “index speculators” (pension funds, endowments, and other institutional investors that have been buying into commodity indexes) are a big factor in the recent price rises. He also doesn’t think it’s the fault of oil companies, OPEC, or any other villain. “It’s just supply and demand, it’s as simple as that,” he said.

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