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Harvest Fund Advisors Added Major Positions in PAA in Q1 2018

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May. 22 2018, Updated 11:32 a.m. ET

Recent institutional activity in PAA

So far in this series, we’ve looked into the institutional activity in four major MLPs: Enterprise Products Partners (EPD), MPLX LP (MPLX), Energy Transfer Partners (ETP), and Energy Transfer Equity (ETE).

In this article, we’ll look into the institutional activity in Plains All American Pipeline (PAA) during the first quarter.

Harvest Fund Advisors and Brookfield Investment Management added major positions in Plains All American Pipeline during the first quarter. They added 14.9 million and 6.7 million shares, respectively.

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The number of institutional holders in Plains All American Pipeline had fallen to 426 by the end of the first quarter compared to 442 in the previous quarter. However, the percentage of its shares held by institutional investors rose to 47.3% from 44.8%. Among the top institutional holders, 18.1 million positions were added, indicating a bullish sentiment in PAA. Energy Income Partners and the Commonwealth Bank of Australia were PAA’s biggest sellers at 6.3 million and 3.1 million shares, respectively. Energy Income Partners continued to sell its position in PAA for the second consecutive quarter.

Why are institutional investors bullish on PAA?

Institutional investors’ bullishness toward PAA can be attributed to the following factors:

  • strong throughput volume growth resulting from strong drilling activity in the prolific Permian Basin, in which the partnership has an active presence
  • logistics and marketing business benefits from a gain in crude oil prices
  • an improved leverage position driven by recent measures
  • significant expansion opportunities, particularly in the Permian Basin
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Top five holders

Alps Advisors, Tortoise Capital Advisors, Goldman Sachs Asset Management, Harvest Fund Advisors, and Kayne Anderson Capital Advisors are the top five institutional holders in PAA. Alps Advisors continues to be the largest institutional holder in PAA despite its unloading of 1.7 million positions. Alps Advisors currently holds 4.6% in PAA.

Analysts’ recommendations

A total of 54.2% of analysts have rated PAA as a “buy” as of May 17, while the remaining 41.7% have rated it as a “hold.” Plains GP Holdings (PAGP), PAA’s GP (general partner), has “buy” ratings from 59.1% of analysts. PAA’s average target price of $25.5 implies a ~2% upside potential from its current price level.

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