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This Institution Stocked up on Western Gas Equity Partners in 3Q17

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Recent institution activity in WGP

Bank of America Merril Lynch was the biggest buyer of Western Gas Equity Partners (WGP), the GP (general partner) of Western Gas Partners (WES) in 3Q17, with an addition of 1.05 million shares. WGP saw the purchase of 1.98 million shares during the quarter, while 1.03 million shares were sold.

Among the top institutional holders in WGP, ~1.3 million positions were added, which indicates a bullish sentiment toward the stock.

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Why are institutional investors bullish on WGP?

Institutional investors’ bullishness toward WGP could be attributed to the following factors:

  • strong distribution growth at Western Gas Partners, driving WGP’s distributable cash flow growth and distributions
  • impressive distribution coverage despite strong distribution growth
  • Western Gas Partners’ strong expansion opportunities in the Delaware and DJ basins
  • strong financial position

Analyst recommendations

As of November 14, 53.3% of surveyed analysts recommend a “buy” for WGP stock, and the remaining 46.7% recommend a “hold.” Seaport Global last initiated coverage on WGP with a “buy” recommendation.

The MLP (master limited partnership) GP has seen three rating updates in 2017 to date, including one upgrade and two new coverages with “buy” recommendations. WGP is now trading below the low range ($40.0) of the analysts’ consensus target price. WGP’s average target price of $47.7 implies a ~31% upside potential from its current price level.

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