Mark Green's Strategic Investment Shift to Small Cap Energy Firm
In a noteworthy pivot in the energy sector, Tennessee Republican, Mark Green, recently transitioned his investments away from a large-cap to a small-cap energy company. The active member of both the Foreign Affairs and Homeland Security committees in the House of Representatives undertook this significant financial move on June 8, 2023.
Green sold shares of Texas-based Energy Transfer LP (ET:US), a company specializing in the transport and storage of natural gas and crude oil, with a market cap of nearly $40 billion. The value of the shares sold falls within the $100,000 - $250,000 range. Simultaneously, he purchased an equivalent value of shares from NGL Energy Partners LP (NGL:US), a diversified midstream energy company based in Oklahoma, with a significantly smaller market cap of $509 million.
Energy Transfer LP, despite its underperformance of the S&P 500 with a return of +3.4% in the past month compared to S&P's +4.6%, has made notable strides in its commitment to clean energy transition. The company recently signed a 15-year Power Purchase Agreement with SB Energy for 120 MW of electricity from its Eiffel Solar project. However, with a closing stock price of $12.67 in its latest trading session, marking a nearly -0.04% move from the previous day, and a consensus sales estimate for the current quarter of $23.49 billion, indicating a year-over-year change of -9.5%, the company's immediate future looks challenging. Its Zacks Rank of #4 (Sell) and a forward P/E ratio of 9.38, lower than the industry average of 11.94, could have potentially influenced Green's decision.
Conversely, NGL Energy Partners LP has showcased substantial growth prospects. The company's earnings outlook has seen a significant improvement, with a projected EPS of $0.11 for the current quarter, marking a year-over-year change of +375%. Furthermore, full-year earnings are expected to reach $0.87 per share, reflecting a monumental year-over-year change of +866.67%. Over the past four weeks, NGL's stock has seen a dramatic increase of more than 33%, partly attributed to strong estimate revisions and sound investments. Currently ranked #2 (Buy) on the Zacks Rank, NGL seems to present an optimistic earnings outlook.
Despite the disparities in market capitalization, both Energy Transfer and NGL play critical roles within the energy sector. Energy Transfer’s vast pipeline network is integral to America's energy infrastructure, while NGL's broad-ranging services for crude oil, natural gas liquids (NGLs), and other products have earned the company a solid reputation.
