MLP monthly roundup highlights
>>>the following was originally posted by abter1 at iV<<<
WF's MLP monthly roundup included a few interesting summary bullets (along with sector and individual MLP data as usual).
Fund Flow was a significant driver of MLP market, as various funds raise capital and move into field. ClearBridge raised $1.7billion capital related to their 2 new MLP ETFs, and along with another new closed end fun, this new money has started to put a lot up upward price pressure in the market. Several billion $$ poised to still enter the MLP market could further support prices. Given the new MLP fund products, which tend to buy large-cap MLPs, and economic uncertainty, large-cap MLPs couldoutperform (on a relative basis), driven by a flight to quality.
Regulatory Risk Is A Growing Concern. They see no legislation that is now directly aimed at MLPs and their tax treatment. However, there are several regulatory and legislative initiatives that could negatively affect MLPs, inclduing (1) the potential for new climate legislation and stricter regulations for oil and gas drilling, (2) financial reform legislation, which could increase the cost of capital and hedging, and (3) potential carried interest legislation, which would not affect
public unitholders, but would still apply to MLP managing members.
One less public GP: Cost Of Capital Driving Transactions. On June 11, 2010, BPL announced they will acquire its publicly traded general partner, BGH, in an all stock transaction. This is the latest in a series of transactions being driven primarily by MLPs’ desire to reduce cost of capital in order to improve their competitive position and support continued growth in LP distributions. This is yet further confirmation that IDRs could become a significant hindrance to growth as the MLP reaches the 50% tier.
Out of the 25 MLPs on WF's outperform MLP list, their top 5 picks (with target price) are Enterprise Products Partners (EPD, $36.00, Energy Transfer Equity (ETE, $34.25), Genesis Energy, L.P. (GEL, $19.71), Targa Resources Partners, L.P. (NGLS, $26.28), and Suburban Propane Partners (SPH, $47.94). |
