1 Opportunity CenterPoint Energy Bears Need to Know About

In February 2016, utility holding company CenterPoint Energy (NYSE: CNP) announced that it was exploring strategic options to sell or spin off its interest in Enable Midstream Partners LP (NYSE: ENBL), a joint venture formed with OGE Energy Corp in 2013 to focus on midstream oil and gas development. The announcement was made not long after the master limited partnership's abysmal performance resulted in a disastrous $1.6 billion equity loss for its majority owner. Therefore, jettisoning the investment would save the utility's shareholders from the volatility inherent to a business based on volume-based sales of commodities.

But 18 months later, the context may have changed. Enable Midstream Partners LP has steadily improved its business in the first nine months of 2017, thanks to a strengthening market supporting its natural gas business and growth projects in promising regions. That has some openly questioning whether CenterPoint Energy should proceed with the strategic process to sell its stake. (The spin option has since been ruled out.)

While the midstream investment provides an important source of cash and accounted for roughly 28% of diluted EPS through the first nine months of 2017, a potential sale still has multiple attractive attributes that investors should consider.

Source: Fool.com