CorrectionSAVNG Research · September 10, 2026
Correction: a low beta made pipeline equity look barely riskier than Treasuries
The claim. Our cost of equity came from beta. A beta of 0.56 produced a 7.6% discount rate for leveraged midstream equity. Fixed 2026-09-08: the floor is now 8.5%, the ten-year Treasury plus a four-point minimum equity premium. Every low-beta valuation moves down on re-analysis.
What happened and what changed
- Symptom: a 7.6% discount rate on leveraged midstream equity, produced by a 0.56 beta.
- Cause: the cost of equity came from beta with a 6.5% floor. Low historical price volatility is not low business risk.
- Fix: floor raised to 8.5% (risk-free 4.5% plus a four-point minimum equity premium). Every low-beta name re-values on its next analysis; utilities, staples and pipelines move most.
Where it does not apply
Utilities, staples and pipelines are the names most affected. The change lowers their intrinsic values; it does not change the ranking within those sectors.
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