Recent institution activity in MPLX
So far in the series, we’ve looked into the institutional activity in six largest MLPs (master limited partnership) by market capitalization, including Enterprise Products Partners (EPD), Williams Partners (WPZ), Energy Transfer Partners (ETP), Energy Transfer Equity (ETE), Magellan Midstream Partners (MMP), and Plains All American Pipeline (PAA).
Below, we’ll look into the institutional activity in MPLX LP (MPLX) during the third quarter.
Tortoise Capital Advisors and Alps Advisors added major positions in MPLX in 3Q17, buying 3.68 million and 3.38 million shares, respectively. The increase in ownership of Marathon Petroleum (MPC), MPLX’s sponsor, is due to the equity issuance in return of dropdowns completed during the quarter.
Among the top institutional holders, 9.33 million positions were added in 3Q17, which indicates a bullish sentiment toward MPLX. Credit Suisse Securities (USA) and Fidelity Management & Research were the biggest sellers, with 1.82 million and 1.79 million shares sold, respectively.
Why are institutional investors bullish on MPLX?
Institutional investors’ bullishness toward MPLX could be attributed to the following factors:
- strong earnings growth
- strong distribution growth, with increased distribution for the 19th-straight quarter (ending September 30, 2017)
- strong support from the sponsor, Marathon Petroleum (MPC)
MPLX saw the highest YoY (year-over-year) EBITDA (earnings before interest, tax, depreciation, and amortization) growth among the top 20 MLPs by market capitalization during the third quarter. For a post-earnings review of MLPLX, read the series MPLX Posted Strong 3Q17 Results, Distributions Rose 4%.
Notably, MPLX completed a dropdown from MPC in 3Q17 valued at $1.1 billion. MPLX recently announced the remaining dropdown from MPC valued at $8.1 billion. These assets are expected to generate $1 billion of annual EBITDA. The partnership expects to close this transaction by February 1, 2018.
Alps Advisors, Tortoise Capital Advisors, Morgan Stanley Investment Management, Harvest Fund Advisors, and OFI SteelPath are the top five institutional holders in MPLX.
Alps Advisors is still the top institutional holder, with its addition of ~3.4 million positions in 3Q17. It now holds 7.9% in MPLX.
As of November 14, 94.1% of surveyed analysts recommend a “buy” for MPLX stock, and the remaining 5.9% recommend a “hold.” Peers Targa Resources (TRGP) and Energy Transfer Partners (ETP) have “buy” recommendations from 57.9% and 75.0% of surveyed analysts, respectively.
MPLX is now trading below the low range ($38.0) of the analysts’ consensus target price. Its average target price of $41.9 implies a ~22% upside potential from its current price level.