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Co-Founder Of Energy Transfer Continues to Make Purchases Worth Millions – Insider Weekends

  • August 27, 2023

Kelcy Warren, the co-founder and CEO of midstream energy company Energy Transfer LP (ET), is a familiar name who’s been featured in various Insider Weekends articles due to the sheer size of his purchases. This time was no different, as Mr. Warren purchased nearly $39 million worth of shares over the last week – adding up to a total of around $220 million Energy Transfer shares purchased over the last year. Since his first series of purchases in August 2022, the stock has mostly been range bound between $10 to $13 a share. The stock is only up 13.25% this year but combined with a forward dividend yield of 9.24%, the total returns have been decent.

We last wrote about the company in a February 2023 article:

Energy Transfer LP (ET) is one of the largest midstream energy companies, with a wide variety of business segments and operations – ranging from natural gas transportation and storage to midstream activities (such as natural gas gathering, processing, and more). The company also has ventures in natural gas liquids and crude oil transportation. The complete list of Energy Transfer’s services can be seen below:

All Services that ET Provides
The full range of services Energy Transfer provides, taken from their January 2023 investor presentation.

The insider who made a purchase of Energy Transfer this week was Kelcy Warren, the co-founder and Executive Chairman of the company. Over the last six months, Mr. Warren has purchased over $90 million of Energy Transfer stock, with his most recent purchase valued at $17.4 million. Since his purchases in September, the stock has not done a whole lot but then again this is a master limited partnership (MLP) with a large yield (forward yield of 9.49%) and the returns are most likely going to be driven by distributions instead of capital gains on the units.

Crude oil prices have dropped significantly over the last year from a high of over $120 per barrel to just over $76 right now. This was driven by the U.S. government releasing significant amounts of oil from the Strategic Petroleum Reserve, concerns about an impending recession driven by Fed policies and partial access to Russian oil. Crude oil futures prices seem to have relatively stabilized, with futures marginally higher than the spot price until June.

Since that article, crude oil futures have remained relatively the same, hovering at a price of around $80 a barrel for the past few days. Energy Transfer, on the other hand, has only continued to grow. On March 27th, 2023, it was announced that the company would acquire the Centurion pipeline operator Lotus Midstream in a transaction valued at around $1.45 billion, and this deal closed on May 5th, 2023. More recently, on August 16th, Energy Transfer announced that it would acquire Crestwood Energy Partners (estimated closing is the fourth quarter of 2023) in an all-equity deal valued at $7.1 billion. These acquisitions fall in line with the overall growth strategy that Energy Transfer has adopted recently. We also wrote about similar growth ventures in our February article, stating:

In Q3 2022, the company hit record intrastate natural gas transportation volumes, record midstream gathered volumes, and record natural gas liquids (NGL) fractionation volumes. To meet the global demand for liquid natural gas (LNG), the company continues to build the Lake Charles LNG Export Terminal project, and has  struck numerous agreements with a variety of companies from all over the world to start supplying them with LNG starting in 2026. Given the big price difference between U.S. natural gas prices and prices in Europe and Asia, this can become a significant source of revenue and profits over the next couple of decades. This is one of the reasons energy investors have bid up the price of LNG export companies like Cheniere Energy (LNG) by nearly 189% over the last five years.

Energy Transfer continues to be a world leader in natural gas liquids (NGL) exportation operations and is expected to begin full commercial service of NGL fractionation at their Mont Belvieu site on September 1st, 2023. However, the Lake Charles LNG project ran into some trouble recently, as Energy Transfer announced in May that they wouldn’t be able to complete the project by the expected 2025 and requested a 3 year extension that the U.S. Department of Energy (DOE) had denied. On August 20th, Energy Transfer had requested a new export license for this multi-billion dollar project that would give the company 7 more years to work on the project. The decision to add a carbon capture and sequestration component to the plant along with other unexpected delays were supposedly why the project was unable to meet its deadline, and potential customers such as Japan and South Korea are depending on the project to fuel their own power plants.

As for fiscal results, for the three months ended on June 30th, 2023 (Q2 2023) net income decreased by $389 million (24%) to $1.23 billion when compared to Q2 2022 and operating income decreased by $278 million over the same time period. These decreases were due primarily to unfavorable NGL prices and natural gas prices in their midstream segment. Total capital expenditure for the first six months of 2023 also increased to $1.70 billion, when compared to $1.42 billion in the first six months of 2022. The increase in capital expenditure is largely related to acquisitions.

Overall, while the decrease in both net income and operating income is slightly concerning, the growth that Energy Transfer is seeing currently and its impressive dividend make the company fairly attractive. The main risk I see here is the Lake Charles LNG project not being completed due to the DOE rejecting the new license. Given the international contracts Energy Transfer has already committed to, the stakes are rather high and it seems like the project will eventually be completed, if not on schedule like originally proposed.

Given that I already have exposure to Energy Transfer via the midstream ETF AMLP, I do not plan on starting a new position in the company. The top five positions in the AMLP ETF account for 60% of the portfolio. It had a 11.78% exposure to Energy Transfer as of 6/30/2023 and helps me avoid receiving schedule K-1 forms from MLPs, especially in a retirement account.

Welcome to edition 696 of Insider Weekends. Insider buying increased last week with insiders purchasing $90.9 million of stock compared to $64.71 million in the week prior. Selling decreased to $721.05 million compared to $1.09 billion in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by the total insider purchases that week. The adjusted ratio for last week dropped to 7.93. In other words, insiders sold almost 8 times as much stock as they purchased. This week, the Sell/Buy ratio was favorable, compared to the prior week when the ratio stood at 16.78.

Notable Insider Buys:

1. Energy Transfer LP (ET): $13.16

Shares of this energy-related services provider were acquired by 2 insiders:

  • Executive Chairman Kelcy L. Warren acquired 3,000,000 shares, paying $12.96 per share for a total amount of $38.89 million. Mr. Warren increased his stake by 4.87% to 64,578,477 shares with this purchase.
  • EVP Bradford D. Whitehurst acquired 10,000 shares, paying $13.00 per share for a total amount of $130,000. Mr. Whitehurst increased his stake by 0.77% to 1,313,055 shares with this purchase.

You can view the list of recent insider transactions for Energy Transfer LP here.

P/E: 10.97 Forward P/E: 8.72 Industry P/E: 8.63
P/S: 0.51 Price/Book: 1.5 EV/EBITDA: 8.62
Market Cap: $41.36B Avg. Daily Volume: 10,758,237 52 Week Range: $10.02 – $13.67

2. Asana, Inc. (ASAN): $21.6

President, CEO, & Chair Dustin A. Moskovitz acquired 849,999 shares of this work management platform, paying $20.31 per share for a total amount of $17.27 million. Mr. Moskovitz increased his stake by 2.06% to 42,042,802 shares with this purchase.

You can view the list of recent insider transactions for Asana, Inc. here.

P/E: -12.07 Forward P/E: -67.5 Industry P/E: 24.80
P/S: 8.09 Price/Book: 13.45 EV/EBITDA: -12.51
Market Cap: $4.68B Avg. Daily Volume: 2,519,169 52 Week Range: $11.32 – $28.92

3. Mercury Systems, Inc. (MRCY): $39.32

Shares of this aerospace and defense technology company were acquired by 4 insiders:

  • President & CEO William L. Ballhaus acquired 39,925 shares, paying $37.57 per share for a total amount of $1.49 million. Mr. Ballhaus increased his stake by 15.84% to 291,999 shares with this purchase.
  • Director Roger A. Krone acquired 15,000 shares, paying $38.50 per share for a total amount of $577,524. These shares were purchased indirectly through a trust.
  • Director Howard L. Lance acquired 9,250 shares, paying $37.83 per share for a total amount of $349,963. These shares were purchased indirectly through a trust.

You can view the list of recent insider transactions for Mercury Systems, Inc. here.

P/E: -78.48 Forward P/E: 21.72 Industry P/E: 19.69
P/S: 2.35 Price/Book: 1.43 EV/EBITDA: 30.39
Market Cap: $2.29B Avg. Daily Volume: 875,070 52 Week Range: $28.9 – $59.13

4. SLR Investment Corp. (SLRC): $15.11

Shares of this asset management company were acquired by 2 insiders:

  • Co-Chief Executive Officer, President, Chairman of the Board Michael S. Gross acquired 74,442 shares, paying $15.02 per share for a total amount of $1.12 million. Mr. Gross increased his stake by 55.83% to 207,789 shares with this purchase.
  • Chief Compliance Officer Guy Talarico acquired 20,000 shares, paying $15.10 per share for a total amount of $302,000. Mr. Talarico increased his stake by 168.08% to 31,899 shares with this purchase.

You can view the list of recent insider transactions for SLR Investment Corp. here.

P/E: 13.61 Forward P/E: 8.89 Industry P/E: 9.45
P/S: 3.9 Price/Book: 0.84 EV/EBITDA: 12.58
Market Cap: $824.32M Avg. Daily Volume: 254,183 52 Week Range: $12.08 – $16.09

5. B. Riley Financial, Inc. (RILY): $45.14

Chairman and Co-CEO Bryant R. Riley acquired 25,000 shares of B. Riley Financial, paying $47.31 per share for a total amount of $1.18 million. Mr. Riley increased his stake by 0.37% to 6,748,773 shares with this purchase.

You can view the list of recent insider transactions for B. Riley Financial, Inc. here.

P/E: 27.86 Forward P/E: N/A Industry P/E: 9.45
P/S: 1.1 Price/Book: 3.19 EV/EBITDA: 9.28
Market Cap: $1.38B Avg. Daily Volume: 281,127 52 Week Range: $24.95 – $60.72

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Airbnb, Inc. (ABNB): $125.79

Shares of Airbnb were sold by 4 insiders:

  • Director Joseph Gebbia sold 166,667 shares for $125.30, generating $20.88 million from the sale. These shares were sold indirectly through a trust.
  • Director Jeffrey D. Jordan sold 10,000 shares for $126.90, generating $1.27 million from the sale. These shares were sold indirectly through a trust.
  • Chief Financial Officer Dave Stephenson sold 6,521 shares for $124.25, generating $810,234 from the sale.
  • Global Head of Hosting Catherine C. Powell sold 2,411 shares for $124.25, generating $299,567 from the sale.

You can view the list of recent insider transactions for Airbnb, Inc. here.

P/E: 37.55 Forward P/E: 32.42 Industry P/E: 16.18
P/S: 8.83 Price/Book: 15.69 EV/EBITDA: 36.55
Market Cap: $80.26B Avg. Daily Volume: 5,371,451 52 Week Range: $81.91 – $154.95

2. Paylocity Holding Corporation (PCTY): $198.05

Shares of this software application company were sold by 2 insiders:

  • Director Steven I. Sarowitz sold 113,458 shares for $192.61, generating $21.85 million from the sale.
  • VP & Chief Accounting Officer Nicholas Rost sold 430 shares for $194.99, generating $83,846 from the sale.

You can view the list of recent insider transactions for Paylocity Holding Corporation here.

P/E: 78.59 Forward P/E: 28.79 Industry P/E: 19.69
P/S: 9.43 Price/Book: 13.14 EV/EBITDA: 58.85
Market Cap: $11.08B Avg. Daily Volume: 405,546 52 Week Range: $160 – $269.34

3. Atlassian Corporation (TEAM): $191.02

Shares of this software application company were sold by 7 insiders:

  • Co-CEO, Co-Founder Michael Cannon-Brookes sold 41,205 shares for $187.65, generating $7.73 million from the sale. These shares were sold indirectly through a trust.
  • Chief Technology Officer Rajeev Bashyam Rajan sold 5,328 shares for $186.70, generating $994,730 from the sale.
  • President Anutthara Bharadwaj sold 5,018 shares for $183.10, generating $918,798 from the sale.
  • Chief Revenue Officer Cameron Deatsch sold 4,441 shares for $184.35, generating $818,704 from the sale.
  • Chief Financial Officer Joseph Leo Binz sold 1,739 shares for $184.35, generating $320,587 from the sale.
  • Principal Accounting Officer Gene Liu sold 276 shares for $184.35, generating $50,880 from the sale.

You can view the list of recent insider transactions for Atlassian Corporation here.

P/E: -100.54 Forward P/E: 66.56 Industry P/E: 24.80
P/S: 13.91 Price/Book: 75.15 EV/EBITDA: -257.76
Market Cap: $49.16B Avg. Daily Volume: 1,808,040 52 Week Range: $113.855 – $264.97

4. Salesforce, Inc. (CRM): $209.47

Shares of this software application company were sold by 3 insiders:

  • Chair and CEO Marc Benioff sold 75,000 shares for $207.13, generating $15.53 million from the sale.
  • President and COO Brian Millham sold 1,746 shares for $209.85, generating $366,398 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Co-Founder and CTO Parker Harris sold 1,250 shares for $209.85, generating $262,313 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Salesforce, Inc. here.

P/E: 551.24 Forward P/E: 25.03 Industry P/E: 24.80
P/S: 6.34 Price/Book: 3.56 EV/EBITDA: 30.72
Market Cap: $204.02B Avg. Daily Volume: 6,355,566 52 Week Range: $126.34 – $238.22

5. Abercrombie & Fitch Co. (ANF): $50.16

Shares of this specialty apparel retailer company were sold by 6 insiders:

  • President-Global Brands Kristin A. Scott sold 143,249 shares for $51.12, generating $7.32 million from the sale.
  • Chief Executive Officer Fran Horowitz sold 60,000 shares for $50.79, generating $3.05 million from the sale.
  • SVP, Gen Cnsl & Secy Gregory J. Henchel sold 27,910 shares for $51.05, generating $1.42 million from the sale.
  • EVP, COO and CFO Scott D. Lipesky sold 25,000 shares for $48.58, generating $1.21 million from the sale.
  • EVP Human Resources Jay Rust sold 2,385 shares for $51.80, generating $123,553 from the sale.
  • Director Kenneth B. Robinson sold 2,000 shares for $51.85, generating $103,690 from the sale.

You can view the list of recent insider transactions for Abercrombie & Fitch Co. here.

P/E: 72.7 Forward P/E: 12.96 Industry P/E: 16.18
P/S: 0.65 Price/Book: 3.27 EV/EBITDA: 8.18
Market Cap: $2.52B Avg. Daily Volume: 1,930,158 52 Week Range: $14.02 – $53.02

You can view the full list of sales from this Insider Sales page.

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium and Plus members.

Disclaimer:  I hold long positions in B. Riley (RILY) and Atlassian (TEAM). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.