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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (150515)	5/6/2011 10:14:56 AM
From: Dennis Roth	2 Recommendations Respond to of 206084

MLP Volatility: Tax Reform or Energy Exposure? Upgrading OKS to Buy and Resuming Coverage of APL with Buy 6 May 2011 ¦ 26 pages citigroupgeo.com MLP Volatility — Since the end of last week MLPs have underperformed the broader market by 500 basis points. For an explanation some investors have pointed to a tax reform proposal that could impact pass-through entities such as MLPs. Alternatively, we do not think this is the primary driving factor behind recent weakness. In our opinion, a broad sweeping corporate tax bill that would threaten pass-through entities does not have a very good chance of making it through the existing House of Representatives with a Republican majority and getting passed into law by the current Administration. Therefore, a market reaction that has been as broad and sustained as what has occurred over the last week is most likely related to the overall sell-off and weakness in the energy sector at a time when MLP trading technicals are also weak. See Section: MLP Tax Reform Section, Probably Not a Good Idea on page 4... ...Since the end of last week, MLPs have underperformed the broader market by 500 basis points. For an explanation some investors have pointed to a tax reform proposal that could impact pass-through entities such as MLPs. Alternatively, we do not think this is the primary driving factor behind recent weakness. In our opinion, a broad sweeping corporate tax bill that would threaten pass-through entities does not have a very good chance of making it through the existing House of Representatives with a Republican majority and getting passed into law by the current Administration. Therefore, a market reaction that has been as broad and sustained as what has occurred over the last week is most likely related to the overall sell-off and weakness in the energy sector at a time when MLP trading technicals are also weak. Taking this into consideration we see the recent weakness in the sector as an enhanced opportunity to buy MLPs with strong underlying fundamentals and multiple years of growth opportunities at more attractive valuations. As we have said in previous reports, we continue to have positive view of owners/operators of midstream assets with a particular focus on NGL assets and liquid rich resource basins. Taking this into consideration we are upgrading ONEOK Partners LP (OKS) to a Buy/Medium Risk (1M) rating from Hold (2M) and resuming coverage of Atlas Pipeline Partners LP (APL) with a Buy/High Risk (1H) rating. To review our outlook on the NGL sector please review the following note: Favor MLPs with Integrated NGL Assets, Strong 1Q Appears Sustainable