Since the early 1980s, Wall Street traders and retail investors alike have looked to Steven “Stevie” Cohen for stock market wisdom.
For the past 40 years or so now, Cohen’s New York Stock Exchange expertise has been trusted by countless traders and investors who have gone on to turn quite a profit in subsequent months and years.
While the stock market looks very different today thanks to the advent of stock trading apps and up-to-the-minute updates about publicly traded companies and stocks, Cohen is still looked to as a wise investor with the net worth to back it up.
As of late, Cohen has been incredibly bullish on one stock in particular: Enbridge, Inc (ENB). But why does Cohen seem to love this company so much, and why should his investment be trusted?
Why Did Stevie Cohen Buy Enbridge Stock?
Stevie Cohen owns shares in all sorts of companies, but his recent investment in Enbridge stock stands out for its sheer size alone: he purchased 484,233 shares, worth over $19 million at the company’s current share price. This is a substantial investment with an even more substantial potential for a huge payoff.
While that $19 million doesn’t exactly hold a candle to the total amount of assets Cohen possesses — in fact, it’s only about 0.1% — it’s still a sizable investment with the potential to grow even more sizable as Enbridge’s earnings per share continues to increase into the future.
Should Enbridge reach the predictions some analysts predict for the company over the next 12 months, Cohen’s investment in the company could be worth over $26.6 million.
This isn’t even counting Enbridge’s dividends, which have been an essential part of the company’s financial strategy for nearly 70 years now: For the past 66 years, Enbridge has reliably paid a dividend to its shareholders.
Recently, Enbridge’s dividend payout reached $0.835 per share. That’s a yield of 7.1%, which is actually quite remarkable. What’s more, this dividend has had a compound annual growth rate of 10% over the past 26 years. In other words, Enbridge is a dividend stock that has a high, dependable return.
Why Listen to Stevie Cohen?
In the 2020 fiscal year, Stevie Cohen amassed $1.4 billion in personal stock earnings alone. This comes directly from the $19 billion in assets under his firm Point72 Asset Management.
These numbers are impressive, to be sure, but they’re also right on par with what many have come to expect from Cohen.
Ever since his first day as a junior trader on Wall Street in 1978 when he earned $8,000 in a single work day, Cohen has proven himself to be someone investors can listen to and trust.
With a net worth of over $13 billion and a current ranking as one of the top 50 richest people in the United States, the reasons to listen to Stevie Cohen speak for themselves.
What Does Enbridge Do?
Enbridge is far and away Canada’s largest distributor of natural gas, making the company one of North America’s largest facets of the energy industry.
In addition to the company’s dominance of Canada, Enbridge also has a hold on 20% of the natural gas market in America, as well as a market share of 25% in all the distribution of crude oil in the United States. Looking at the entire continent of North America as a whole, Enbridge ranks as the third-largest natural gas company by number of total consumers alone.
As if these figures weren’t enough, just look at Enbridge’s second quarter results for 2021: Earnings per share (EPS) exceeded predictions by 10 cents, coming in at $0.55 instead of $0.45.
Distributable cash flow, which is used by Enbridge to cover the company’s dividends, also rose higher than anticipated: up to $2.5 billion from $2.4 billion.
Presently, the company predicts to see its year-end earnings reach between $13.9 and $14.3 billion. Given these solid Q2 figures, there’s no denying Enbridge will be able to hit this range.
What Does the Future Look Like for Enbridge?
Judging by the company’s prediction for its full-year earnings, the future looks good for Enbridge and Enbridge shareholders alike.
This prediction only grows more legitimate when looking at what financial analysts predict to see Enbridge’s price per share rise to over the next 12 months: These analysts expect to see Enbridge stock rise as high as $55, up nearly $15 from its current price per share.
There have been some concerns about Enbridge over the past couple of quarters, but Stevie Cohen’s investment in the company shows that many of the top investors don’t seem too concerned about the more troubling numbers to come out of the most recent quarterly earnings report.
Still, it’s worth mentioning them.
While Enbridge’s EPS is up to $0.55, it’s still down from last year’s EPS of $0.65. Additionally, the company’s cash from operations is also down: $2.2 billion instead of $2.4 billion compared to Q2 of 2020.
Whether or not Enbridge can top last year’s highs remains to be seen, but Cohen’s investment is still a good sign for many retail investors and traders regardless.
The Bottom Line: Why Billionaire Stevie Cohen Loves Enbridge
From Enbridge’s financial stability throughout the duration of the Coronavirus pandemic to its 66-year history of paying substantial and dependable dividends to its shareholders to its solid-looking forecasts for the years to come, there’s a whole lot for Stevie Cohen to love about the North American natural gas titan.
Likewise, there are plenty of reasons for retail investors and traders to trust Cohen’s big investment in Enbridge (even if you don’t happen to have $19 million just sitting around yourself).
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.