A look back and a look aheadA look back:
April 1, 2009...ENB trading at $18.42
April 1, 2014....ENB trading at $52.82, up 187% in 5 years (Obama years)
The driver behind the dramatic increase in the share price was the cash infusion by governments in 2008/2009 to save the economy. During the 5 year period, ENB pretty much just went along for the ride as the company stayed the course.
Following another two plus years of share price appreciation up to $63 per share, ENB acquired Spectra. The market punished the ENB share price for what appears in hindsight to be a move of pure genius. Without Spectra, ENB would be just another oil pipeline today.
By April 1, 2018, ENB was trading down at $38.89
ENB management responded to the sagging share price by cleaning up its balance sheet via selling $8 billion worth of assets and by simplifying its corporate structure by consolidating its limited partnerships. The share price moved back up over $57 at its peak in February 2020.
Current situation:
Covid strikes>>>>oil demand collapses>>>>oil price drops>>>>pipeline usage drops
April 2, 2020....ENB trading at $38.83
As part of a compromise to appease the Democratic left spearheaded by the green friendly Bernie Sanders, Biden had to adopt a more green friendly political platform.
As Biden begins having success in the polls, Trump immediately exaggerates the situation like he does for everything and suddenly we are hearing and reading that Biden is against oil which has never been the case in the past.
The next thing we know, as our friend Fiddy says " Green good....Oil Bad"
Perhaps promted by the surprising strength of the Democrats under Biden, Capital Group (the biggest shareholder of ENB (at + or - 183mm shares) begins to unload to the tune of 57mm by the end of Q2. The slow and controlled selling by Capital's didn't damage the share price in Q2 as the market was booming.
As of July 1, 2020....ENB share price was $41. 28
Capital Group continued to unload its ENB position in July and August and yet the ENB share price moved up to close at $45.09 on August 12th. How did the share price increase despite the massive volume of sales by Capital Group relative to the average daily volumes? The disproportionate amount of selling should have decimated the ENB share price but it didn't. Why?
I believe the answer is "The Buyer". Begining early July (the start of Q3) somebody decided to accumulate a massive position in ENB.
In hindsight, it is blatantly obvious that Capital and other institutions wanting to shift their focus away from oil, have been selling into a dark pool that has been accumulating a position for The Buyer. The entire process has been accomplished in an incredibly steathy manner until this past Wednesday when the volumes of the already huge end of day crosses suddenly exploded upwards.
Hindsight is so much easier that forecasting.
Here is what I expect is going to happen:
The Buyer is going to continue acquiring as many ENB shares as it can while the institution wanting out of Oil wil continue to sell. I anticipate that the volumes in the form of pre-arranged crosses will continue to huge this week.
When the institutions have to report their change in holding on Nov 15th, I believe we will see that somebody has picked up a minority interest in ENB. Adding 20% or more of ENB's financials to the financials of The Buyer will turn some heads. The Buyer may choose to disguise their minority interest holding by splitting up the ownership between various companies that it controls.
From November 15th onwards, things may or may not get interesting.
The Buyer may insist upon receiving a seat or more on the BoD of ENB...or not. The Buyer may take an aggressive or passive approach.
The mgmt of ENB can't do much about whatever The Buyer has in mind other than reach out to its institutional shareholders with hat in hand. If The Buyer is a huge player, it will probably have the upper hand in negotiations with the ENB institutional holders and will get its way, whatever that may be. To the credit of the mgmt of ENB, I don't think anyone could do a better job of running the operations that they currrently own, so I don't see a takeover in the cards.
This is what I would like to see happen
The best option for me would be that The Buyer is somebody like KKR. If the buyer is someone like KKR, a deal would be cut to sell off the liquid pipes for a huge amount of money to The Buyer who would then package the liquid pipes (perhaps with other assets they may have or intend to acquire) in a public deal when the market sentiment and demand for oil improves (which it will). This scenario would allow ENB to get out from under the dark clout of oil and the company would then use the funds to try to become the next NEE.
The next best option would be that The Buyer turns out to be BLK because they have virtually unlimited funds and a deep understanding of and experience with ESG. In this scenario, BLK would mentor ENB into the next NEE. A distant second but still formidable Buyer could be BAM who would do pretty much the same thing as BLK but on a smaller scale.
Imo, the least attractive (but still formidable) Buyer would be BRK. I say the least attractive because BRK would bring very little to the table in terms of expertise in the Go Green world. They would offer credibilitiy and financial depth to build out the company faster than ENB could do on its own.
OR
This is has all been my personal flight of fantasy and things will go on as usual as the huge crossed for the past 4+ months has simply been normal course activity.