Obviously ETE is ultimately the beneficary if ETP is successful through the IDRs. Thus ETE is a bit more transparent. ETP has moved up about 5% in the last week so it is not sitting on its butt as you state. ETP has a problem with a very convoluted structure involving a big ownership in SXL that will be coming in the next quarter. I do not know where ETP is going, but I do know they have sold off $3B of assets, bought or are in the process of acquiring some $5B in new assets and have about $4B under construction of already completed this year.
Will all of this be successful. My opinion is since the projects are almost all fee based - yes. The organic projects are at an approximate 16% ROI and the acquisitions at about 8-9%. Thus all coming on line should be accretive. Suggest you go to the ETP 10Q reports and read a couple. Would think you will both be excited and also confused as the need to keep investment grade for debt rating made the structures VERY strange. In the meanwhile you have a secure distribution paying 8.75%.
Is there downside? Take a look at the chart and every time ETP gets to $42 and a 8.75% yield it bounces up. When SUN buy it complete along with a couple big gathering projects and the APU units begin to be sold the distribution can again creep up.
Is there an upside? Absolutely. Remember that ETP/ETE will be the GP and largest holder of SXL. Some incredible things going on there that will benefit ETP. Also cash needs will go away for a year or more in 2013 with APU unit sale and probable sale of Sunoco gas stations.
Thanks for the input but it does not really get at my question.
ETP is definitely sitting on its butt. It is near 52 week lows, in the low 40s and has not showed any propensity to returning to the 50s. The high distribution rate (8+%) is indicative of shareholder sentiment.
My real question is aimed at why ETE is testing its 52 week highs, while etp is near its 52 week lows. They are supposed to be based on the same fundamentals, with only a slight advantage for ETE being the GP.