Why TC Pipelines (TCP) Stock is a Compelling Investment Case

Steel City Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. During the third quarter of 2020, the fund returned 1.6% net of fees, while the S&P 500 Index was up 8.5%. You should check out Steel City Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Steel City Capital highlighted a few stocks and TC Pipelines LP (NYSE:TCP) is one of them. TC Pipelines LP (NYSE:TCP) is a natural gas transmission company. Year-to-date, TC Pipelines LP (NYSE:TCP) stock lost 30.4% and on October 27th it had a closing price of $29.13. Here is what Steel City Capital said:

“TC Pipelines (Long): When I initiated a position in TCP in late March, I did so because the shares were a screaming buy. At the time, TCP’s P/E and P/FCF multiples were sub-7x and shares offered a safe dividend yield in excess of 12.0%. Despite a rebound to low-$30s (a gain of roughly 50% on our cost basis), shares remain extremely attractive for a business characterized by a high degree of cash flow visibility and strong investment-grade counterparties.

Apparently TCP’s corporate parent – Canadian-based TC Energy – knows a bargain when they see it as well. They recently offered to acquire all of TCP’s outstanding shares at a price of $27.31. I view this offer as an opportunistic attempt to purchase all of TCP at a steep discount to the company’s intrinsic value and published an open letter to the company’s Board of Directors. The full text of the letter is attached as Appendix A. Any deal requires the approval of a majority of current shareholders and the top of TCP’s register is highly concentrated. The top 5 shareholders will have considerable sway in how the situation unfolds and I remain optimistic that they will push for a more appropriate valuation.”

In April, we published an article revealing Steel City Capital’s bullish investment thesis on TC Pipelines LP (NYSE:TCP) stock in its Q1 2020 investor letter. This suggests that the investment firm has been bullish for a long time on TC Pipelines LP (NYSE:TCP).

Our calculations showed that TC Pipelines LP (NYSE:TCP) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.