We recently compiled a list of the 99% of Billionaire Abrams’ Portfolio is in These 11 Stocks. In this article, we are going to take a look at where Energy Transfer LP (NYSE:ET) stands against the other stocks in David Abrams’ portfolio.
Founded in 1999 by David Abrams, Abrams Capital Management is an investment fund that strives to generate value by leveraging opportunistic and value-oriented investment strategies. Likewise, its portfolio is well-skewed to navigate any challenging macro environment, as it mainly focuses on value investments.
In addition, Abrams Capital Management’s portfolio focuses on diversifying its holdings across various asset classes. Stocks, debt, and distressed securities are some of its top asset classes. Diversification and value investments are some of the strategies that have allowed Abrams to perform better than other hedge fund managers, based on an annualized net return of 15% over the past 15 years.
Abrams Capital Management is primarily invested in the Services sector in the equity markets, which accounts for 25% of its holdings, with Technology stocks accounting for about 11,% followed in third by Basic Materials stocks. The strategic distribution affirms the hedge fund’s focus on sectors with higher prospects for value growth that align with long-term investment philosophy.
In the third quarter, Abrams made significant changes, trimming stakes in some holdings while increasing in others. The hedge fund made no new purchases or sales, reduced holdings in 3 stocks, and did not add to any existing positions. The top 10 holdings constitute 97.75% of the portfolio. The investments are concentrated in seven key sectors. The changes reflect the calculated approach in response to changing macroeconomics.
Our Methodology
To compile the list of billionaire Abrams’ portfolio we scanned Abrams Capital Management’s third quarter portfolio, focusing on the biggest holdings based on investment size. Upon analyzing the stocks, focusing on why they stand out, we ranked them in ascending order based on Abrams Capital Management’s equity stake.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of an oil rig at sunrise, emphasizing the power of the natural gas transportation industry.
Energy Transfer LP (NYSE:ET)
Abrams Capital Management’s Q3 2024 Investment: $286.24 Million
Percentage of Abrams Capital Management’s Portfolio: 4.59%
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) owns and runs natural gas pipelines and storage facilities. It also sells natural gas to electric utilities, power plants, and local distributors. The stock has gone up by over 24% this year, even though the energy sector is struggling with oil prices falling below $75 a barrel.
Energy Transfer LP (NYSE:ET) has one of the largest energy networks in the U.S., with nearly 130,000 miles of pipelines in 44 states. Over the past 20 years, it has grown from a small pipeline operator to a major energy company. Its large natural gas pipeline network is ready to meet increasing electricity demand. The company’s various assets, including oil, NGL, and gas pipelines, help maintain strong earnings.
Energy Transfer LP (NYSE:ET) reported strong third-quarter results on November 6, 2024. Net income for shareholders was $1.18 billion, up from $466 million last year. Distributable Cash Flow for partners rose by $4 million to $1.99 billion. Their strong results come from a diverse asset portfolio, including the largest fractionation facility and a large pipeline network for transporting oil, gas, and NGLs.
Data centers, driven by AI expansion, are expected to account for 8% of U.S. power demand by 2030, up from 3% in 2022, according to a Goldman Sachs report. Energy Transfer LP (NYSE:ET)’s long-term prospects are good due to growing demand for power from AI and data centers. In November, Energy Transfer (ET.N) announced it received requests for connections to over 90 power plants and data centers, potentially adding 16 billion cubic feet per day of new natural gas demand.
Overall ET ranks 7th on our list of stocks in David Abrams’ portfolio. While we acknowledge the potential of ET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.