Recent institutional activity in WPZ
The number of institutional holders in Williams Partners (WPZ), the midstream MLP subsidiary of Williams Companies (WMB), increased to 355 by the end of the fourth quarter compared to 340 in the previous quarter. The percentage of shares held by institutional investors saw a marginal decline. BMO Capital Markets and Appaloosa Management unloaded major positions in WPZ during the quarter. They sold 3.75 million and 3.72 million shares, respectively.
The top institutional holders added 2.37 million positions, which indicates a bullish sentiment in WPZ. Goldman Sachs & Company and Morgan Stanley Investment Management were the biggest buyers. They bought 3.21 million and 3.02 million shares, respectively.
Why are institutional investors bullish on WPZ?
Institutional investors’ bullishness towards WPZ could be attributed to the following factors:
- Natural gas production growth was strong in the Appalachian region including Marcellus and Utica.
- The partnership’s organic projects completed on time. The partnership had placed five major Transco expansion projects by the end of 2017 including Gulf Trace, Virginia Southside II, Hillabee Phase 1, Dalton Expansion, and New York Bay Expansion.
- The company improved its financial position and reduced commodity price exposure, both resulting from recent asset sales.
- The company has a robust natural gas demand outlook amid an increase in demand from LNG exports, power plants, and residential customers.
Top five holders
Alps Advisors, Fidelity Management & Research Company, Harvest Fund Advisors, Tortoise Capital Advisors, and Kayne Anderson Capital Advisors are among the top five institutional holders in WPZ. Alps Advisors became the top institutional holder in the partnership after Fidelity Management & Research Company unloaded 1.6 million positions in the recent quarter. Alps Advisors currently holds 2.2% in WPZ.
80.0% of analysts surveyed by Reuters rate WPZ a “buy,” while the remaining 20.0% rate it as a “hold” as of February 23. Peers Spectra Energy Partners (SEP) and EQT Midstream Partners (EQM) have “buy” ratings from 44.4% and 64.7% of analysts, respectively. WPZ’s average target price of $46.4 implies ~23% upside potential from the current price levels.