According to SEC filings, Energy Transfer (ET) Chairman CEO, Kelcy Warren made two recent purchases of ET shares, bringing his total ownership to more than $3.36 billion. The transactions have met mixed reviews. Some feel that Warren has too much influence on ET, while others look at the purchases as a sign of good things to come.
Bullish on ET
Those who view Warren’s actions as a sign of a looming bull market site factors like ET continuing to sign LNG agreements with overseas companies, including a recent 20-year LNG supply deal with Shell and a recent deal with China Gas to supply 0.7M tonnes of LNG per annum on a free-on-board basis. ET bulls maintain that the company looks extremely undervalued compared to its peers.
Recovering from pandemic woes
Like most energy companies, ET was forced to cut back on its distribution to shareholders during the pandemic. However, the company has rebounded and over the past three quarters has increased its quarterly distribution by more than 50%. The third quarter distribution was 23 cents per share.
Many fans of Energy Transfer, such as “Barbell Capital” author Steven Fiorello, feel that the company is still undervalued. In a period where the S&P index has declined by 6.81%, shares of ET have increased by 9.05%. With a current price of $10.83, Fiorello calls ET a “strong buy” and views the company’s real value to be around $20 per share.
Fiorello cites advantageous EV/EBITDA and debt-to-adjusted EBITDA ratios to support his view.
About Kelcy Warren
Kelcy Warren is the chairman and CEO of Energy Transfer. A native of East Texas, Warren learned about the gas and oil industries from childhood. His father worked for Sun Oil in various capacities. As a teenager, Warren helped to repair oilfield leaks, was a welder’s helper and worked on pipeline construction. He was also involved in scouting and his mother and father served as den leaders.
Warren is a graduate of the University of Texas with a degree in civil engineering. After college, he began his professional career working for Lone Star Gas Company as a pipeline design engineer. Later, he joined Endevco, a small energy development company, acquiring the company as a partner in 1992. Warren sold Endevco in 1996 and went on to found Energy Transfer, a company that “gathers, treats, processes and transports natural gas, natural gas liquids, refined products and crude oil. Through Energy Transfer, Warren oversees one of the most diversified portfolios of publicly traded energy partnerships in the United States.
Warren is a 2016 recipient of the Horatio Alger Award, which recognizes “personal initiative and perseverance, leadership and commitment to excellence, belief in the free-enterprise system and the importance of higher education, community service and the vision and determination to achieve a better future.” The award is named for the American author who rose from humble beginnings to success in children’s literature. Between 10 and 12 people receive the award each year.
See more from Kelcy Warren here: https://www.crunchbase.com/person/kelcy-l-warren