In one week, Kelcy Warren made two purchases that totaled 3 million units of Energy Transfer. That brings his total ownership to 3.36 billion dollars based on a closing price of 11.81. Kelcy Warren has a history of purchasing ET units, making it clear that he continues to consider it undervalued. 

Who Is Kelcy Warren? 

Kelcy Warren has a civil engineering degree from the University of Texas at Arlington and began his career at Lone Start Gas Company. He has worked for Endevco and Cornerstone Natural Gas for the past four decades. 

Originally from Gladewater, Texas, Kelcy Warren learned the importance of finances early in life. Both his parents worked jobs back then and were always looking for more ways to earn money. For instance, they opened a trailer park to increase family revenue. His father also had his own newspaper route. He remembers his father getting up at 2:30 every morning to get the papers ready to deliver. 

Today, Warren is the chairman and CEO of Energy Transfer Partners. The company handles natural gas and propane pipeline transports. He also manages or is on the board of a number of other companies in the energy industry. 

Energy Transfer Purchases

The last two purchases reflect a long line of Kelcy Warren buying ET units. He bought units regardless of their prices, too. In 2017, ET was trading at 20 dollars per unit, and Warren still purchased shares. More recently, he has bought the stock at lower prices, some under 10 dollars a unit. He has continued buying at 61.61 percent higher than he did in 2021. 

Why ET Might Be Bullish

Experts suggest that this purchasing activity is one more factor that supports the bullish nature of ET. The company is continuing to sign LNG agreements overseas. They recently entered into a 20-year LNG supply contract with Shell. 

ET suffered like many companies during the pandemic. They knocked their quarterly distribution down from .3050 to 1525 dollars to focus on its debts to EBITDA. This reduced the distribution by half, forcing investors to pay for this accommodation of debt. 

The future is looking brighter, though. ET has seen three consecutive quarterly distribution increases per unit. That means a boost for investors who have been suffering losses for a few quarters. As of Q3, unit holders see .23 dollars in their distributions, bringing it back up from .1525. 

The management team, including Warren, was straightforward about their decision to reduce distributions and why. As a result, they could acquire Enable Midstream, strengthen their operations, and reduce their leverage ratio by reallocating capital. ET had $730 million in excess distributable income last quarter after distributing $710 million and investing $440 million in new projects. ET generates a lot of distributable cash flow (DCF), and there is plenty of room to keep increasing distributions and return to a $0.3050 quarterly distribution rate in 2023.

The fact that Warren is still buying indicates he believes ET is still undervalued. 

 Learn more about Kelcy Warren here: https://horatioalger.org/members/member-detail/kelcy-l-warren