Question : why has ete been out performing etp by such a large margin?
ETE is about 10% below a year high which it just hit in oct, and etp 10% above year low which it hit in nov??? ete is up about 10% ytd, etp down 10%, In the longer term is it better to switch or wait for the transfer of assets to etp which might get etp to out perform ete???
ETE is up simply because in 3 1/2 years when all the ETP givebacks are gone its distribution will grow at a rate about twice that of ETP. ETE is actually not up more - the ETE results skewed because of the SUG buyout battle. If you pick a different date range results are different, but I do agree ETE has been stronger.
For the truly long term investor - ETE might be better because eventually ETE will get folded into ETP. Everything depends on your time frame. Near term, 2-5 years or over 5 years. You get different answers for each. Also none of us knows what is going to actually happen with RGC or SXL along with all the other SUG and SUN assets.
Somewhere down the line ETP will probably buy out ETE to eliminate the IDR's that ETE owns. That will cut the cost of capital down dor ETP going forward. To do the buy-out(merger) the ETE unit-holders will have to be compensated for ETE to give up those IDR's. That would mean a premium to be paid to the ETE unitholders of "X" amount. Could be 10%-20% or more depending upon many factors. The longer they wait to accomplish this the closer ETE gets to starting to receive the deferred distributions coming down the pike in 3 or 4 years. There are manmy complications in the interum-RGC-SXL and the SUG and SUN assets.. Most important question I think is how can ETP afford it???
Kelsey Warren is smart-- He created this So I'm sure he will figure it out. The original game plan was ALL THE MONEY EVENTUALLY GOES TO ETE. ETE will have to be sold to ETP for a big premium to make it happen.