Post by
Marner16 on Mar 27, 2021 10:55am
Overweight ENB
As Sarge noted, TRP has been the best performing pipe since KXL was cancelled, which he believes can be attributed to the company and the market "moving on".
I agree with Sarge on why TRP has outperformed its peers recently and for a similar reason, I remain overweight ENB.
ENB as a company continues to check off all of the boxes....low risk....predictable returns...high yield....solid growth potential.....and leading the way in focusing on green. I contend that the uncertainty of a decision on Line 5 is inappropriately holding back ENB's share price.
It is important to never forget that the big boys (fund managers) control the share price of large cap stox. It is also important to remember that fund managers get paid for performance which means they can't afford to underperform. That in turn means they need to perform "right now".
When the KXL decision was "up in the air", fund managers stayed away from TRP which drove the share price down. As soon as the KXL decision was made, the uncertainty was removed and it is not a surprise at all the TRP has recovered despite the fact that the decison went the wrong way for TRP.
IMO, Line 3 is not an issue at all for ENB's share price despite the fact that a hand full of natives like being on TV to support their agenda. Fund managers look at Line 3 as a done deal. If Biden was going to get involved in a negative way, he would have done so by now. Four months of the six months of digging required have already been completed under Biden's watch.
The massive end of day crosses have slowed down to a trickle which is an indication that the selling pressure on ENB shares is off.
I expect that the moment that Whitmer's ill-conceived political play gets rejected in court, the current Risk Off mentality will switch to Risk On when it comes to investing in ENB.
I like investing in great companies that I believe are being unfairly punished by the market due to short sighted fund managers.
I think ENB is being unfairly punished by the perceived risk of Line 5. In the worst case scenario, where Line 5 gets shut down and ENB does nothing in response to the shutdown, which I think is a very remote possibility, ENB's DCF is only going to be aversely affected by about 2% or possibly 3% at the very most.
Given ENB's rather brilliant track record, I suspect that ENB management will have contingency plans in place which would divert the dilbit elsewhere.
You can check out ENB's massive network of pipes which they can reroute liquids from Line 5 originating in Duluth here:
https://www.enbridge.com/~/media/Enb/Documents/Factsheets/FS_EnergyInfrastructureAssets.pdf?la=en
Once the unknown of Line 5's fate has been lifted, I believe we will learn about a significant shift in ownership of ENB because the hundreds of millions of shares sold by fund managers had to be bought by somebody which to date has not been reflected in the 13F filing.
Comment by
FreeAtFiddy on Mar 27, 2021 1:39pm
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