8. Energy Transfer LP (NYSE:ET)
Gain Over Past 12 Months: 47.35%
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) is one of the largest and most diversified midstream energy companies in North America with approximately 133,000 miles of pipelines transporting oil and gas products.
Energy Transfer LP (NYSE:ET) remains focused on expanding its transportation and processing footprint in the Permian basin and acquired WTG Midstream Holdings in a $3.25 billion deal last year. The company also announced the formation of a JV with Sunoco LP last summer, combining their respective crude oil and produced water gathering assets in the Permian Basin. These, combined with several other expansion projects to enter service this year, should supply ET with a healthy stream of incremental income in the coming quarters.
Energy Transfer LP (NYSE:ET) announced last month that its unit has entered a 20-year LNG sale and purchase agreement with oil and gas major Chevron, putting its long-delayed Lake Charles export terminal another step closer to becoming a reality. The company’s LNG business is also expected to significantly benefit from President Donald Trump’s recent order to reverse a pause on permits for new LNG projects that former President Joe Biden put in place in early 2024.
Energy Transfer LP (NYSE:ET) has also recently highlighted strong interest from power generation firms and data center operators in natural gas pipeline projects, driven by the surging power demands from the expansion of AI infrastructure. Moreover, to support its operations and increase system reliability, the company has started construction on eight 10-MW natural gas-fired electric generation facilities, which are expected to come online this year.
Energy Transfer LP (NYSE:ET) announced a quarterly dividend of $0.3225 per share in October 2024, marking the 12th consecutive quarterly dividend increase, and firmly placing it in our list of the Top 20 Dividend Stocks of 2024.
Patient Capital Management stated the following regarding Energy Transfer LP (NYSE:ET) in its Q3 2024 investor letter:
“Energy names disappointed in the quarter following commodity prices lower throughout the period. We took the opportunity to add to our highest conviction ideas. We look to names that have idiosyncratic opportunities and are attractive in a variety of different commodity price environments. Many see risk to energy prices over the next year as supply is expected to outstrip demand by 1.3mb/d even before assuming any incremental OPEC supply comes onto the market. With commodities, consensus is rarely right. We assess companies on through cycle returns and normalized prices. From this perspective, we see a handful of attractive opportunities, including Energy Transfer LP (NYSE:ET), Seadrill, and Kosmos.
Our ownership of Energy Transfer began in 2019 with the belief that the limited supply of new pipelines would provide attractive pricing opportunities over the long-term. At the same time, the company was paying us an attractive dividend (10% yield over the period). So far this investment thesis has largely played out, but we continue to see an attractive long-term setup for the name given our belief that natural gas will be a key ingredient to bridge us to a net carbon neutral world.”
