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Enterprise: New Highs and Duncan’s Still Buying...By Graham SummersFriday, August 25, 2006 In the July 26th issue of Growth Stock Wire I wrote about an ultimate insider, Dan Duncan.
Duncan started the second biggest “midstream” natural gas company in the USA, Enterprise Products Partners (EPD), back in 1968 with $10,000 and a couple of trucks.
Today – 40 years later - Enterprise is one of the largest publicly traded energy partnerships in the U.S., with an enterprise value of more than $15 billion. The company has stopped using trucks and now transports natural gas, natural gas liquids (NGLs), and crude oil through some 32,670 miles of onshore and offshore pipelines.
When I introduced Duncan in these pages, I wrote:
“Enterprise has made Duncan a billionaire several times over. Forbes now ranks him as the 100th richest man in the world with a net worth of $6 billion. Yet, rather than using this personal fortune to branch out into new industries, Duncan has repeatedly plowed more of his own money into Enterprise’s stock.
In 2004, he bought $49 million worth. In 2005, he was back for another $10 million. And so far in 2006, he’s bought $5.6 million.”
Well, if you’ve watched our New Highs list lately, Enterprise is a frequent guest… and Duncan continues to load up on company stock.
He bought $2.8 million worth of EPD in June. He’s also been buying shares in Enterprise’s general partner company, Enterprise GP Holdings (EPE): $2.8 million worth of EPE stock in the last three months to be exact.
In fact, EPD and EPE are the only publicly traded companies Duncan has bought in the last two years. It’s little surprise; Enterprise offers one of the safest ways to invest in the energy sector today.
You see, Enterprise is a midstream energy company. This means the vast majority of its business has to do with the storage, processing, refining, and shipping of natural gas and NGLs. The company doesn’t bother exploring or producing the gas, it just makes the products ready for market.
So regardless of energy prices, natural gas producers are always going to require EPD’s services. The company is a middleman who simply cannot be cut out of the energy production picture.
Dan Duncan is certainly betting on it. And you don’t get to be the 100th richest man in the world by getting on the wrong side of your bets.
Good investing,
Graham
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