What Are Institutional Investors Doing with Positions in PAA?


Mar. 2 2018, Updated 9:03 a.m. ET

Recent institutional activity in PAA

So far in the series, we’ve looked at the institutional activity in the six largest MLPs by market capitalization: Enterprise Products Partners (EPD), Williams Partners (WPZ), MPLX (MPLX), Energy Transfer Partners (ETP), Spectra Energy Partners (SEP), and Energy Transfer Equity (ETE). In this article, we’ll look into the institutional activity in Plains All American Pipeline (PAA) during the fourth quarter.

Harvest Fund Advisors and CIBC Atlantic Trust Private Wealth Management added major positions in Plains All American Pipeline during the fourth quarter. They added 5.8 million and 3.8 million shares, respectively.

The number of institutional holders in Plains All American Pipeline fell to 442 by the end of the fourth quarter compared to 445 in the previous quarter. However, the percentage of shares held by institutional investors rose to 44.8% from 43.8% during the same timeframe.

Among the top institutional holders, 5.9 million positions were added, which indicates a bullish sentiment in PAA. Energy Income Partners and Bank of America Merrill Lynch were the biggest sellers with 3.2 million and 3.0 million shares sold.

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Why are institutional investors bullish on PAA

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

  • Crude oil prices have been strong, which benefits the partnership’s logistics & marketing business.
  • Drilling activity has been prolific in the Permian Basin where the partnership has an active presence.
  • The improved leverage position has been driven by recent measures including two distribution cuts.

Top five holders

Alps Advisors, Tortoise Capital Advisors, Goldman Sachs Asset Management, Harvest Fund Advisors, and Kayne Anderson Capital Advisors are among the top five institutional holders in PAA. Alps Advisors continues to be the largest institutional holder in PAA with an addition of 0.95 million positions. Alps Advisors currently holds 4.8% in PAA.

Analyst recommendations

56.0% of analysts rate PAA a “buy” as of February 23, while the remaining 44.0% rate it a “hold.” Plains GP Holdings (PAGP), PAA’s GP (general partner), has “buy” ratings from 65.2% of analysts. PAA’s average target price of $24.8 implies ~16% upside potential from the current price levels.


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