Building a stock portfolio worth more than $100 million is probably every market player’s dream. Savvy stock-picker Alan Gaines, a onetime guitarist, has done just that. What makes his feat even more noteworthy is that he has amassed his nine-figure portfolio by doing what just about every financial adviser says investors should never, ever do: putting all their money into one industry.

Mr. Gaines has invested most of his assets in the energy sector. It was a smart choice. As most investors know, energy has been on fire in recent years, far outpacing the general market on the skyrocketing price of oil.

Because of his stock-picking skills, Mr. Gaines, an adviser to Carl Icahn’s hostile takeover efforts in the energy sector (including Texaco and Phillips Petroleum), has appeared frequently in this column over the past five years. In fact, Mr. Icahn once told me: “If you want to know about energy, ask Alan Gaines. That’s what I would do.”

Often, our energy whiz’s appearance in this column has been the result of a reader’s inquiry. That’s the case once again. In a recent e-mail message, Melinda Casey wrote: “I made a lot of money on three of Alan Gaines’ energy stock recommendations — Chesapeake Energy, Comstock Resources and ConocoPhillips — all of which I still own. Is he still favorably disposed to this group? If so, could you also please ask him what is his favorite energy stock.”

This inquiry about Mr. Gaines’s latest energy thoughts is timely. For the first time in a number of years, he has embarked on a mini selling binge, and that includes the sales of some of the very stocks Ms. Casey owns.

In effect, Mr. Gaines is taking profits, reducing his holdings in a slew of energy stocks by about 33% to 50%. These are all long-term holdings, some of which date back 15 years, and for the most part represent market capitalizations in excess of $1 billion. At the same time, he is increasing his positions in some energy stocks that he favors.

Mr. Gaines remains a die-hard energy bull and sees oil climbing to $200 a barrel — as does Goldman Sachs — largely because of surging demand from China and India, and shrinking supply. If oil hits $200, he says he would expect to see prices at the gas pump — already up about 22% over the past year — jump to at least $7 to $8 a gallon. That’s more than double the record — the current national average of $3.75 a gallon — that gas hit earlier this week.

Mr. Gaines, 52, the chairman of Houston-based Dune Energy, has been unloading partial stakes in such companies as Chesapeake Energy, Comstock Resources, Range Resources, Cimarex Energy, Carrizo Oil & Gas, Stone Energy, and Arena Resources.

The reason for the sales is their huge gains in recent months, in some cases as much as 30%, leading Mr. Gaines to conclude that a number of his energy stocks are fairly valued and possibly vulnerable to declines of maybe 10% to 15% over the next six months.

“Nothing goes up forever,” he says. “I’m not looking for any collapse in energy stocks; I just think I’ll be able to buy them back cheaper. Bernard Baruch once said, ‘You can’t go broke taking profits,’ and I believe it.”

Meanwhile, Mr. Gaines, who is bullish on commodities, is adding to existing positions in certain energy companies whose very strong fundamentals, he says, haven’t been fully recognized. These include Marathon Oil, Newfield Exploration, Energy Partners, and Allis-Chalmers Energy.

He has also initiated new stakes in what he describes as “unrecognized values,” notably Parallel Petroleum and Exco Resources.

His no. 1 energy pick? “It’s a bad question to ask me; I don’t have a favorite,” he says. “I think you need a portfolio approach to energy, not just one stock, because these shares have all done so well.”

What about the giant integrated oil companies? Mr. Gaines says he thinks investors should hold on to certain names, especially Exxon Mobil, Chevron, and his favorite big oil stock, ConocoPhillips. His reasoning: good overall fundamentals, earnings visibility, and some dividend yield, which fattens the overall return.

His wrap-up on the energy sector? “This bull market is far from over; it’s still too soon to say goodbye.”

He may be right, but Oppenheimer & Co.’s veteran energy analyst, Fadel Gheit, tells me that if the beleaguered dollar should continue to rally (oil is traded in dollars), the price of crude — which is currently trading around $125 a barrel and factors in about a $15 a barrel premium for potential supply disruptions — is likely headed lower.

dandordan@aol.com