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John Linehan Sells Out Targa Resources

- By Kyle Ferguson

John Linehan, portfolio manager of the the T. Rowe Price Equity Income Fund, sold out 375,000 shares of Targa Resources Corp. (TRGP) during the first quarter.


Headquartered in Houston, Texas, Targa Resources Corp. is a midstream energy company in North America.

It provides midstream services. Its segments include Gathering and Processing, and Logistics and Marketing (Downstream Business). It is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling natural gas liquids (NGLs) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing and terminalling crude oil, and storing, terminalling and selling refined petroleum products.

Targa Resources Corp. has a market cap of $11.68 billion, an enterprise value of $16.14, a P/B ratio of 1.93, a quick ratio of 0.74, and a dividend yield of 6.57.

John Linehan purchased his stake in Targa Resources during the fourth quarter of 2016.

Since the fourth quarter of 2016, the company's market price gained an estimated 15% during the time that Linehan held the security.

According to GuruFocus, the company has a 4 of 10 financial strength rating with a cash-debt ratio of 0.02 and an equity-asset ratio of 0.41. It has an interest coverage ratio of 0.22. The company's Beneish M-Score of -2.58 indicates it is not a manipulator of its financial statements.

The company has a 3 of 10 profitability and growth rating. It has an operating margin of 0.83%, a net margin of -2.80%, a return on assets (ROA) of -1.44% and a three-year EBITDA growth rate of -29.80%.

Over the previous year, Targa Resources' market price has gained an estimated 48%.

Over the previous five years, the company has averaged decreases in its net income -118.32%, earnings per share -59.52%, capital spending -0.71% and cash flow -55.64%.

Targa Resources announced on April 19 that it will report its first quarter 2017 financial results before the markets open for trading on Thursday, May 4.

It is possible that John Linehan decided to sell out his remaining shares of Targa Resources because he made 15% on his investment and he believes that the company is overvalued.

According to the Peter Lynch chart below Targa Resources is trading well above its intrinsic value.


Disclosure: Author does not own any shares of this company.

This article first appeared on GuruFocus.