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Tortoise Capital Advisors Bought ~40 Million Shares of ETP

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Recent institutional activity in ETP

Energy Transfer Partners (ETP), the MLP subsidiary of Energy Transfer Equity (ETE), saw massive buying from institutional investors for the second consecutive quarter. Tortoise Capital Advisors bought 39.5 million shares of ETP worth $707.1 million during the last quarter. It was followed by UBS Financial Services, which added 13.0 million positions in the Texas-based partnership. UBS Financial Services has added 23.1 million positions in the last two quarters.

On the other hand, Bank of America Merrill Lynch and Harvest Fund Advisors were the top two sellers in the partnership. They sold 28.4 million and 6.0 million shares, respectively.

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The number of institutional holders in ETP increased to 596 by the end of the fourth quarter compared to 562 in the previous quarter. At the same time, the percentage of outstanding shares held by institutional investors increased to 65.1% from 64.4%. Among the top institutional holders, a massive 55.1 million positions were added, which indicates a bullish sentiment in the stock.

Why are institutional investors bullish on ETP?

Institutional investors’ bullishness towards ETP could be attributed to the following factors:

  • The stock is trading at a significant discount to the historical level. The partnership is currently trading at a forward EV-to-EBITDA multiple of 7.9x, which is below the last one-year average of 10.2x.
  • The strong earnings growth has been driven by expansion projects placed into service. For post-earnings analysis of ETP, read How ETE and ETP Fared in 4Q17.
  • Better non-fee-based margins have been due to the recovery in crude oil and NGLs (natural gas liquids) prices.
  • The company has a strong project backlog.
  • The company’s financial position has improved due to recent measures including asset sales and the stake sale in Sunoco (SUN).
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Top five holders

Alps Advisors, Harvest Fund Advisors, OFI SteelPath, UBS Financial Services, and Tortoise Capital Advisors are among the top five institutional holders in ETP. Alps Advisors surpassed Harvest Fund Advisors to become the largest institutional holder in ETP with an addition of 6.5 million positions, while the latter sold 6.0 million positions. Alps Advisors currently holds 5.2% in the partnership.

Analyst recommendations

75.0% of analysts surveyed by Reuters rate ETP a “buy” as of February 23, while the remaining 25.0% rate it a “hold.” ETP peers MPLX (MPLX) and Enterprise Products Partners (EPD) have “buy” ratings from 78.9% and 96.3% of analysts, respectively. ETP’s average target price of $24.4 implies 27% upside potential from the current price levels.

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