Top 5 Stocks in Bruce Berkowitz Portfolio

2. Enterprise Products Partners LP (NYSE:EPD)

Number of shares as of March 31, 2023: 4,182,800
Share of Fairholme portfolio as of March 31, 2023: 8.96%
Number of Hedge Fund Holders: 26

Enterprise Products Partners LP (NYSE:EPD) provides midstream energy services to consumers and producers in the natural gas market. Fairholme exited the stock in Q4 2020 and returned in Q2 2021 by purchasing 75,000 shares, a stake that grew to 4.14 million shares by the end of 2022. The fund added 40,000 more shares in Q1 2023 to bring the total holding to 4.18 million, which claims 8.96% of the fund’s portfolio.

In the first quarter, 26 hedge funds expressed a bullish stance on Enterprise Products Partners LP (NYSE:EPD), slightly up from the previous quarter’s 24 funds. Notably, Fairholme (FAIRX) holds the largest stake in the company.

Legacy Ridge Capital Management, LLC  made the following comment about Enterprise Products Partners L.P. (NYSE:EPD) in its Q4 2022 investor letter:

“Enterprise Products Partners L.P. (NYSE:EPD) is still owned in the fund and remains one of our largest positions, as it has been since the partnership was founded. This has not been a great investment. Shares are down about 6% since I first wrote about it. However, we have received $8.93 per share in dividends, which is about 34% of the 2018 share price. So, with dividends included we’ve made 28% cumulatively over 5-years. Still not good, but not an impairment of capital either.

Since 2018, EPD’s dividend yield has gone from 6.5% to 8% with the annual per share payout growing from $1.72 to $1.96, +14%. The pace of dividend growth has recently increased from about 2% to 5%+. Additionally, Distributable Cash Flow per share (what could be paid to us if management wanted to) has increased 22%, from $2.73 to $3.33, while leverage has come down a little over ½ a turn. So, the balance sheet and cash flow metrics are in better shape than they were 5-years ago, and they were pretty good 5-years ago.

The competitive dominance of the asset base, industry leading low leverage, and a founding family with multiple billions of dollars invested alongside us keep it a core holding in the portfolio. We’ll continue to own this company unless the shares become meaningfully overvalued, and if it gets cheaper, we would be very comfortable owning more.”