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First Reserve Unloaded Major Position in WES

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Mar. 1 2018, Published 4:21 p.m. ET

Recent institutional activity in WES

In this part of the series, we’ll look at the recent institutional activity for Western Gas Partners (WES), the MLP subsidiary of Anadarko Petroleum Corporation (APC). First Reserve unloaded a major position of 14.1 million shares in WES during 4Q17. First Reserve is an energy-focused private equity firm. It also holds a major position in Crestwood Equity Partners (CEQP). Top institutional holders sold 0.8 million shares. This excludes First Reserve’s stake sale. Top institutional holders sold 0.66 million shares of Western Gas Equity Partners (WGP), WES’s GP (general partner).

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Why are institutional investors bearish on WES?

Institutional investors’ bearishness toward WES could be attributed to the following factors:

  • weak earnings in the recent quarters due to decline in throughput volumes in some regions
  • low distribution coverage
  • increase in leverage

Analyst recommendations

52.6% of analysts rate WES a “buy,” and the remaining 47.4% rate it a “hold” as of February 23, 2018. At the same time, 56.3% of analysts rate WGP a “hold,” while the remaining 43.7% rate it a “buy.” WES and WGP’s average target prices of $57.2 and $46.0, respectively, implies a ~20.0% and ~23.0% upside potential from their current price levels.

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