Why Are These Energy Stocks Fading Today?

Page 2 of 2

In other news, energy pipeline companies Williams Companies Inc (NYSE:WMB) and Energy Transfer Partners LP (NYSE:ETP) are off by 16.5% and 11%, respectively, as market participants head for the exits simultaneously in the midstream space. Given the recent stock decline of Kinder Morgan Inc (NYSE:KMI), which was considered one of the best-in-class midstream companies not too long ago, many investors are selling first and asking questions later. If Kinder Morgan suspends its dividend or cuts it substantially, investors fear other midstream companies might follow suit. In addition, if crude prices stay ‘lower for longer’, U.S. crude and gas production will not increase as much as analysts forecast and demand for midstream pipelines will not be as great.

Given the steep declines in both stocks, the cost of equity for both companies is rising to a point where the companies may not be able to finance some of their projected future growth capital expenditures anyway. Within our extensive database of around 730 elite funds, 73 of them, or about 10%, were long Williams Companies Inc (NYSE:WMB), while 18 funds were long Energy Transfer Partners LP (NYSE:ETP) at the end of September.

Follow Williams Companies Inc. (NYSE:WMB)

Disclosure: None

Page 2 of 2