Those of you who follow the stock of Energy Transfer Partners (which owns the Dragonpipe) will have noticed it has taken a sharp drop this week. It started the week (on August 14) at $20.20 per share, and it is now (August 16) at $18.37.
The reasons are somewhat complicated, but they are laid out in this report from Bloomberg.
From my reading of the article, there are two basic factors in the drop. First, ETP had to raise over $1 billion to cover its massive borrowings. It did so by issuing new shares, which reduced the value of existing shares.
Second, ETP is a financial arrangement called a “master limited partnership” (MLP). That means that some of its profits go straight to its parent, or general partner, an entity called Energy Transfer Equity (ETE). The owners of ETP “units” (shares) only get their cut after ETE takes its. That may be fine when times are good and growth is rapid, but times are just OK for ETP right now, so owners of ETP stock aren’t getting the dividends they expected. That too is pushing the price lower.