Finally, it was announced that Energy Transfer Partners L.P. has expressed an interest in acquiring Targa Resources Corp. (TRGP), an energy midstream MLP business that owns storage, pipelines, gathering and processing facilities in the Balkans, Gulf Coast and Permian Basin. Energy Transfer has interests in those areas that would be complemented by Targa’s properties. Energy Transfer acquired Baron Growth Fund’s investment in Southern Union (also held in several other Baron funds) in 2011. We had been an investor in Southern Union since 1995 and made about eight times our money from that initial investment, and about three times our money overall, when that business was acquired. We have owned Targa since its IPO in December 2010 and have so far made more than six times our money from that initial investment. One more thing, Energy Transfer has been an even better investment than the companies they acquired! Unfortunately, for us, we so far missed that one.
Targa Resources Corp. is the general partner of Targa Resources Partners, a growth oriented MLP with a premier natural gas liquids midstream presence on the Gulf Coast and crude and gas midstream presence at several major shale energy regions. Shares of Targa increased significantly as Targa continued to execute on its growth projects and provided upside to its quarterly and annual guidance. Rumors of a possible acquisition of the company also sent the stock higher. We believe Targa has unique assets that will allow the general partner to show a strong dividend growth profile. (Gilad Shany)
From Ron Baron (Trades, Portfolio)’s Baron Funds Second Quarter 2014 Report.
