Energy Transfer: The Berkshire Hathaway Of The Midstream Industry

Summary

• On the surface, Energy Transfer is a midstream partnership, one of the largest in the country.
• Beneath the surface, they are a collection of quality businesses acquired across the last two decades and in my eyes, makes them alike to an energy-focused Berkshire Hathaway.
• Management plans to continue their acquisition-focused strategy and I estimate they have circa $10b of spare capacity to deploy.
• Despite acquisitions sometimes being thought of negatively, they reduce regulatory risks, which is becoming an increasingly big issue for the midstream industry.
• Following another solid quarter, I believe that maintaining my strong buy rating is appropriate.

cagkansayin

Introduction

When reviewing the first quarter of 2022 results from Energy Transfer (NYSE:ET), my previous article also discussed how their hidden value could unlock 20%+ of free distribution growth, which is especially appealing given their existing high yield of

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ET, ETRN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.