Core Viewpoint - Ripple Effect Asset Management has initiated a significant new position in Antero Midstream Corporation, acquiring 510,000 shares valued at approximately $9.91 million, while also holding put and call options, indicating a strategic approach to risk-reward management [2][3][6]. Company Overview - Antero Midstream Corporation is a leading midstream energy company that provides essential gathering, processing, and water services to natural gas producers, primarily in the Appalachian Basin [5][8]. - The company reported a revenue of $1.25 billion and a net income of $472.42 million for the trailing twelve months (TTM), with a dividend yield of 5% [5]. Recent Performance - Antero Midstream's stock price was $17.94, reflecting a 16% increase over the past year, which is in line with the S&P 500's nearly 17% gain during the same period [4]. - The company's third-quarter results showed a 10% year-over-year increase in adjusted EBITDA to $281 million, with free cash flow after dividends nearly doubling to $78 million [9]. Investment Strategy - The combination of common shares with both put and call options suggests that investors are engineering specific outcomes rather than merely seeking yield, which is notable for a midstream company typically viewed as a cash-flow vehicle [6][10]. - The put options indicate a strategy for downside protection against volatility, while the call options suggest potential upside if market conditions improve [10].

Industry Overview - The Zacks Oil and Gas Production and Pipeline industry is essential for meeting global energy demand, driven by economic growth and rising consumption in emerging markets [1] - Despite the shift toward renewables, hydrocarbons remain crucial for transportation, heating, and petrochemical production [1] - Technological advancements like horizontal drilling and enhanced recovery techniques are unlocking new reserves and boosting productivity [1] Pipeline Infrastructure - Pipeline infrastructure is critical for transporting crude oil, natural gas, and refined products efficiently [2] - Stable, fee-based revenue models and long-term contracts provide predictable cash flows for pipeline operators, insulating them from commodity price volatility [2] - The expansion of North American shale production and rising export capacity is expected to increase demand for midstream infrastructure [2] Company Comparisons - Energy Transfer (ET) and Kinder Morgan (KMI) are two of the largest midstream energy companies in North America, operating extensive networks of pipelines and storage facilities [3] - ET offers a diversified midstream infrastructure with stable cash flows and strategic export terminal access, positioning it well for rising U.S. energy production and global demand [4] - KMI has a primarily natural gas-focused midstream network with long-term contracts that provide predictable cash flows, appealing to income-focused investors [5] Earnings Growth Projections - The Zacks Consensus Estimate for ET's earnings per share (EPS) in 2025 and 2026 has increased by 2.86% and 4.26%, respectively [7] - KMI's 2025 EPS estimate has declined by 0.8%, while its 2026 EPS moved up by 2.26% [9] Dividend Yield - ET offers a dividend yield of 7.2%, significantly higher than KMI's 4.04% and the S&P 500's average of 1.58% [8][12] Valuation Metrics - ET is trading at a forward P/E of 12.54X, which is cheaper than KMI's 22.08X and the S&P 500's 22.43X [8][15] - ET's current return on equity (ROE) is 11.47%, while KMI's ROE is 16.6%, both underperforming the S&P 500's ROE of 17.02% [10] Debt to Capital - ET's debt-to-capital ratio is 56.6%, compared to KMI's 48.42%, both higher than the S&P 500's 38.07% [14] Price Performance - ET's units have gained 4.2% in the past month, outperforming KMI's 1.2% gain and the S&P 500's return of 4.4% [16] Conclusion - Energy Transfer is currently favored over Kinder Morgan due to rising earnings estimates, higher dividend yield, better return on equity, and cheaper valuation [20][21]