Energy Transfer: The Distribution Looks Safe For Now - But Here's What Worries Me (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• I maintain my contrarian underperform/sell rating on Energy Transfer and its preferred shares, despite widespread bullish sentiment.
• Weak macroeconomic indicators are reason enough to retain a bearish view on the company. But there are some new concerns as well.
• Higher-for-longer interest rates and large capex funding needs increase leverage risks, especially if ET can't secure more equity partners for its Lake Charles Project.
• Distributions appear safe for now, but the numbers show that the margin of safety is eroding gradually.
• ET's valuations are near long-term fair value, but the relative technicals vs. SPX500 look more bearish now, warning of underperformance in the quarters ahead.

Read the full article here.