Enterprise Products Partners L.P. (EPD): Among Billionaire Bruce Berkowitz's Stock Picks with Highest Upside Potential

We recently published a list of Billionaire Bruce Berkowitz’s 6 Stock Picks with Highest Upside Potential. In this article, we are going to take a look at where Enterprise Products Partners L.P. (NYSE:EPD) stands against Billionaire Bruce Berkowitz’s other stock picks with highest upside potential.

One of the most prominent hedge fund managers on Wall Street and founder of Fairholme Capital Management, billionaire Bruce Berkowitz’s track record and unique investing approach make his portfolio choices well worth a closer look. Berkowitz is renowned for his bold bets on unloved assets, his high-conviction investment style, and his rare ability to spot dollar bills being sold for pennies- and the guts to hold them until the market catches up.

His ability to focus on facts and ignore the market chatter has helped him deliver strong results and earned him strong accolades in the industry. Named Morningstar’s Domestic-Stock Fund Manager in 2009 and Institutional Investor Magazine’s Money Manager of the Year in 2013, his honors underscore his reputation as a value investor worth following.

READ ALSO: 10 AI Stocks on Wall Street’s Radar Right Now and  10 AI Stocks Getting Wall Street’s Attention Right Now.

Berkowitz has always believed in owning a handful of stocks. These stocks, however, are those in which he believes deeply. After all, high-conviction investing is the name of the game.

“You only need a few ideas in a lifetime to do unbelievably well.”

-Bruce Berkowitz

He is also a staunch believer in reality. Hated assets usually have hidden value, and the trick, he believes, is to look at the facts instead of reacting to trauma like others do.

“Ignore the crowd. Count what matters.”

-Bruce Berkowitz

In an interview with Bill Brewster from the Business Brew, Bruce Berkowitz talked about how he started Fairholme with a simple mission: managing his family’s money. From the very beginning, Fairholme wasn’t a marketing organization. Rather, the fund’s unique approach was vested in value creation rather than asset gathering. Focusing solely on deep research and concentrated positions, Berkowitz often ran portfolios with only a few ideas.

Over the years, Berkowitz learned how financial metrics, on which he relied with much conviction in the early years, weren’t the only factors to consider. Rather, management quality and ownership culture were equally important. This shift in perspective has made him more selective as he strongly believes that the right leadership can make or break an organization, particularly during tough times. That said, Berkowitz highlighted in the interview how he now avoids doing business with executives he doesn’t trust, regardless of how shiny the financials may seem.

Moreover, Berkowitz’s investments are almost entirely US-focused. The sole reason for this strategy has been his commitment to deep understanding and control. According to him, sound investing requires a good grasp of the company’s regulatory environment, tax structure, supply chain, and other related factors. Building that level of expertise made him limit his universe to the US, where he is comfortably focused on a few three to six positions where he tries to fully understand the industry, the competitors, the suppliers, and more. According to him, the US is a sound market to operate in, especially for a value investor dreaming of capital appreciation and preservation.

“His aptitude for picking stocks sets him apart from his peers, and Fairholme’s portfolio is filled with attractively priced firms that generate high free cash flow. Berkowitz’s strategy has led to a stellar long-term record, and his large cash stakes have helped limit volatility.”

– Then director of mutual fund analysis for Morningstar, Karen Dolan, said of Berkowitz

For this list, we picked stocks from Fairholme Capital Management’s 13F portfolio as of the end of the fourth quarter of 2024. We listed them in the ascending order of analysts’ average upside potential, as of May 9. These equities are also popular among other hedge funds. The hedge fund data is as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points  (see more details here).

Enterprise Products Partners L.P. (NYSE:EPD)

Fairholme Capital Management’s Stake: $170,877,504

Number of Hedge Fund Holders: 29

Average Upside Potential: 23.46%

Enterprise Products Partners L.P. (NYSE:EPD) is one of the largest midstream energy services providers in the United States. It provides energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. Midstream companies like EPD help move oil and natural gas around from the places where it is drilled to the places where it is processed and/or consumed.

In a market largely impacted by tariffs and other macroeconomic uncertainty, EPD remains an exception, considering that it generates its revenue by charging upstream extraction companies and downstream refining companies what are known as “tolls” to use its pipes. This business model makes it well-insulated from tariffs, inflation, and other macro headwinds largely because fluctuating gas prices don’t affect it.

Several analysts are bullish on Enterprise Products Partners L.P. owing to its strong fundamentals, attractive valuation, and future growth. In particular, its toll-taking business and insulation from macroeconomic headwinds make it particularly attractive. On May 1, Jean Ann Salisbury from Bank of America Securities maintained a “Buy” rating on the stock with a price target of $38.00. Salisbury has a buy rating on the stock despite the company slightly missing its first-quarter earnings on the back of its strong future potential.

While first-quarter earnings were a miss due to lower marketing margins and chemical outputs, the firm noted that the company’s backlog remains stable and that it has also reiterated its commitment to a stock buyback by 2026. The strategy will be supported by the company’s capital expenditure plans, which imply that a significant portion of free cash flow will be directed towards buybacks. Enterprise also enjoys several advantages, such as its brownfield cost advantages and robust export contracts. It also has a competitive edge in expanding its LPG export capacity at a lower cost compared to greenfield projects. The company also sports a stable revenue stream on the back of its take-or-pay contracts, which make up a significant portion of its exports. Together with a strong dividend yield, Enterprise seems to be a company defensively positioned in an uncertain macro environment.

Overall, EPD ranks 3rd on our list of Billionaire Bruce Berkowitz’s stock picks with highest upside potential. While we acknowledge the potential of EPD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than EPD but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.