Why Shares of Enbridge Energy Companies Popped Today
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Enbridge Energy Partners, L.P. jumped 14% today, while Enbridge Energy Management, L.L.C. popped 12% after the subsidiary announced the sale of assets.
So what: Enbridge Energy Partners is selling a 12.6% interest in its mid-stream natural gas business Midcoast Operating, L.P. to Midcoast Energy Partners, L.P. for $350 million. This is a drop-down of assets. After the deal Enbridge Partners will retain 48.4% of the limited partnership Midcoast Operating.
Now what: One of the goals here is to increase liquidity to fund a multi-billion dollar liquids pipeline at Enbridge Partners while still holding an economic interest in the mid-stream natural gas business. Incrementally the deal will add liquidity, but the bigger driver of value long-term comes from a pipeline replacement plan that could cost $7.5 billion. At the end of the day, I don't think this fundamentally changes the investment thesis in any of these three companies, it just shifts assets around -- something oil and gas companies are doing a lot of these days.
Do you know this energy tax "loophole"?
Enbridge is taking advantage of rules that encourages investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.
The article Why Shares of Enbridge Energy Companies Popped Today originally appeared on Fool.com.Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Enbridge Energy Partners. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.