Hedge fund Kingdon Capital sees room for growth at Energy Transfer Equity

NEW YORK Thu Feb 13, 2014 4:29pm EST

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NEW YORK (Reuters) - Energy Transfer Equity LP is undervalued by 50 percent and could receive a shot in the arm from the company's plan to issue this year a new master limited partnership security tied to its Lake Charles natural gas liquefaction facility, hedge fund Kingdon Capital Management said.

"Their intrinsic value is $60 today," Kingdon's Philip Hilal said at the 2014 Harbor Investment Conference late on Wednesday. Energy Transfer Equity ended trading on Thursday up $1.27, or 2.9 percent, at $44.04.

The company has announced plans to complete an offering to help finance construction of Lake Charles, which could help investors ascribe fair value to the asset.

Energy Transfer Equity, which owns general partner interests in three master limited partnerships, should benefit from rising U.S. crude oil production and be largely insulated from commodity-price fluctuations due to its fee-based business model.

It is also expected to benefit from acquisitions at Energy Transfer Partners and growth at Sunoco Logistics Partners, two of its daughter master limited partnerships, Hilal said.

Kingdon, which invests roughly $2.5 billion, gained 23.82 percent last year and its 15.08 percent average annual return ranks among the strongest in the hedge fund industry.

(Reporting by Svea Herbst-Bayliss; Editing by Richard Chang)

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