Our Take On Enterprise Products Partners LP's Acquisition Of Oiltanking Partners LP
- Investors should take profits on OILT, which offers much different investment proposition than EPD. Portfolio managers likely will rotate out of name in favor of other growth-oriented fare.
- NS or NSH would be suitable replacements for OILT in your portfolio; these turnaround stories should deliver yield compression. NS also has valuable dock space in Corpus Christi.
- OILT acquisition not immediately accretive, but strategic value of assets is critical b/c of NGLs and crude oil flowing to Gulf Coast. Also provides dock space to ramp condensate exports.
- EPD a foundational portfolio holding, but investors should only buy on pullbacks. Fear of rising interest rates should provide buying opportunities.