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Energy Transfer Equity Chairman Makes a Million-Share Buy

In the single largest insider purchase reported to the SEC on Wednesday, Mr. Kelcy L. Warren, Chairman of the board of directors of natural gas pipeline operator Energy Transfer Equity, L.P. (NYSE:ETE), has increased his stake… by 1 million shares.

This is according to a Form 4 filing on insider share purchases filed with the SEC Wednesday, which confirms that on July 7, Warren paid an average of$62.63 per share to acquire 624,400 shares of Energy Transfer. One day later, as the shares began rising, Warren chased them higher, buying a further 375,600 shares on July 8, at an average of $62.95 apiece.

That makes 1 million shares bought in total.

$63,042,797 spent.

And it brings Mr. Warren’s total ownership stake in the company to 80,703,000 shares (according to data provided by Nasdaq.com). But the question for outside investors today is: Should you join him?

What does it mean to you?
Priced at nearly 46 times earnings already, Energy Transfer shares look richly priced even if the company achieves the long-term earnings growth rate of 25% annually, that analysts project for it.

That said, Mr. Warren’s massive insider buys over the past two days serve as a strong vote of confidence in the company’s prospects, and by one of the men who knows the company best. Factor in the fact that Energy Transfer shares are up over the past year, and outperforming the market — and that they pay a substantial dividend yield of 3.1%, and it’s just possible that there’s more to this stock than meets the eye.

 

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