But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
Energy Transfer Partners’ cash flows are a strong positive
The major thing to highlight in Energy Transfer Partners’ cash flow is the increasing amount of money it’s been distributing to unitholders over the years.
Over the years, while Energy Transfer Partners’ investing cash flows have been quite volatile, they’ve been strong enough to give us some confidence.
In March 2013, the Fed was forecasting that 2015 inflation would be ~1.5%–2%. By the December 2014 meeting, it decreased that number to 1%–1.6%.
The recovery hasn’t been satisfying. Due to consumption and consumer deleveraging, the necessary spending isn’t generated to pull the economy out of its slow growth pattern.
The FOMC (Federal Open Market Committee) statement characterized the labor market. In 2015, the Fed is forecasting that unemployment will fall to 5.2%–5.3%.
Yesterday, the Federal Reserve ended its September FOMC meeting. It changed its language regarding interest rate normalization going forward.
At a broader level, ~80% of analysts rate Energy Transfer Partners as “buy,” and ~20% rate it as “hold.” There are no “sell” recommendations on ETP.
ETP believes “significant value is embedded” within Energy Transfer Partners’ subsidiary interests in these companies.
Analysts expect Energy Transfer Partners to post good growth numbers in the years ahead. Its income statement is expected to double from 2013 levels.
Here, we’ll compare Energy Transfer Partners to its closest peers individually. This should give you a better idea of where it stands.
Energy Transfer Partners stands out for trading at a discount to its peers and very close to the broad market.
Energy Transfer Partners’ debt has exploded from ~$3.7 billion at the end of 2007 to ~$19 billion at the end of 3Q14.
Energy Transfer Partners’ enterprise value more than quadrupled between 2007 and 3Q14.
When we look at Energy Transfer Partners’ distributions, we find another reason to like the company.
In the first three quarters of 2013 alone, Energy Transfer Partners’ operating cash flows reached ~$2 billion.
Continuing our analysis of ETP’s financial statements, we’ll see how Energy Transfer Partners’ balance sheet has evolved over the last seven years.
Energy Transfer Partners’ profits were ~$1.2 billion in 2011. In 2013—the first year after the acquisitions—it reported operating profits of ~$2.2 billion.
Energy Transfer Partners’ revenue was at ~$6.7 billion at the end of 2007. At the end of 2013, this number stood at ~$46 billion.
ETP is AMLP’s third-largest holding, and it accounts for just under 8% of the fund. So what’s behind Energy Transfer Partners’ solid performance?
AMLP lost ~7%. This means ETP delivered a returns spread of ~20% over its peers during one of the worst periods—so it’s one of the best energy MLPs.