If a corporate insider is spending millions of dollars on company stock, it’s often worth taking a closer look. Insiders are some of the most informed participants in the market and their trades can provide valuable investment insights.
In this report, we are going to highlight some substantial insider buying at Energy Transfer LP (ET:US). Energy Transfer is an energy company that specializes in the transportation, storage, and terminalling of natural gas, crude oil, natural gas liquids (NGLs), refined products, and liquid natural gas. It has one of America’s largest energy portfolios with assets in 41 states, as well as international offices in Beijing. The company is listed on the New York Stock Exchange and currently has a market cap of approximately $38.18 billion.
Insider Buying at Energy Transfer
2iQ data shows that in February, Energy Transfer’s Founder and Executive Chairman Kelcy Warren made two large stock purchases. On February 22, he bought 1.339 ET million shares at a price of $12.99 per share. Then, on February 23, he bought another 1.661 million ET shares at a price of $13.05 per share. Combined, these trades were worth around $39 million.
Energy Industry Veteran
There are unlikely to be many people who have a better understanding of Energy Transfer than Mr. Warren. A recognized leader in the energy industry with over 40 years’ experience, he co-founded Energy Transfer in 1996 as a small intrastate natural gas pipeline operator. Under his leadership, the company has grown into one of the largest and most diversified publicly traded energy companies in the industry.
It’s worth noting that Mr. Warren has made a number of large stock purchases over the last six months or so. Since August 2022, he has snapped up 142.3 million ET shares, boosting the size of his position substantially. This suggests that he firmly believes the stock is set to move higher.
Strong Q4 Results
Energy Transfer recently posted strong Q4 results.
For the quarter, adjusted EBITDA came in at $3.44 billion compared to $2.81 billion for the same period a year earlier. The improved results were primarily due to higher volumes across all of its core segments as well as the impact of the acquisition of Enable Midstream.
NGL transportation volumes for the quarter were up 5%, setting a new Partnership record, while Midstream throughput volumes increased 32%, also setting a new Partnership record. On the company’s earnings call, management noted that the group moved a record amount of volumes across all of its segments in 2022, including a record level of exports of natural gas liquids (NGL) out of its Nederland terminal.
On the back of this performance, the company announced a quarterly cash distribution of $0.35 per common unit or $1.22 on an annualized basis – a 75% increase over the fourth quarter of 2021.
In light of these strong results, and the fact that the stock trades at a low valuation currently, we see the insider buying here as a bullish development.