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Elliott Gue knows energy. Since earning his bachelor’s and master’s degrees from the University of London, Elliott has dedicated himself to learning the ins and outs of this dynamic sector, scouring trade magazines, attending industry conferences, touring facilities and meeting with management teams.

Elliott Gue’s knowledge of the energy sector and prescient investment calls prompted the official program of the 2008 G-8 Summit in Tokyo to call him “the world’s leading energy strategist.”

He has also appeared on CNBC and Bloomberg TV and has been quoted in a number of major publications, including Barron’s, Forbes and the Washington Post. Elliott Gue’s expertise and track record of success have also made him a sought-after speaker at MoneyShows and events hosted by the Association of Individual Investors.

Elliott Gue also contributed chapters on developments in global energy markets to two books published by the FT Press, The Silk Road to Riches: How You Can Profit by Investing in Asia’s Newfound Prosperity and Rise of the State: Profitable Investing and Geopolitics in the 21st Century.

Prior to founding the Capitalist Times, Elliott Gue shared his expertise and stock-picking abilities with individual investors in two highly regarded research publications, MLP Profits and The Energy Strategist, as well as long-running financial advisory Personal Finance.

In October 2012, Elliott Gue launched the Energy & Income Advisor, a semimonthly online newsletter that’s dedicated to uncovering the most profitable opportunities in the energy sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.

The masthead may have changed, but subscribers can expect Elliott Gue to deliver the same high-quality analysis and rational assessment of investment opportunities in the energy patch.

Articles

V-MLPs: A Refined View

Three of the 10 publicly traded partnerships that pay variable distributions own and operate small refineries and related assets. Although these stocks were hot commodities when they first went public, investors’ interest cooled after crack spreads narrowed and distributions shrank rapidly. But there’s opportunity in this space for investors with a nose for value and special situations.

Distributions May Vary: The Smart Investor’s Guide to V-MLPs

Many energy-related masted limited partnerships (MLP) own assets that generate reliable cash flow and exhibit limited sensitivity to commodity prices, credit conditions and the state of the economy.

Names that own midstream assets–pipelines and other infrastructure that transport hydrocarbons from the wellhead and prepare them for sale–often generate their cash flow from multiyear agreements that guarantee a minimum payment. Of course, investors must keep tabs on when these contracts end and whether expiring contracts can be renewed at similar, or more favorable, terms.

Whereas publicly traded partnerships usually privilege reliable cash flow and distribution growth, variable-rate MLPs (V-MLP) offer a different value proposition and make no effort to hedge their exposure to commodity prices or economic conditions.

These publicly traded partnerships deliver distribution coverage of 100 percent each quarter, but their payouts will vary depending on the performance of their underlying business.

Most V-MLPs own and operate downstream assets such as refineries or chemical plants–industries where earnings fluctuate with commodity prices and exhibit greater volatility than in the midstream segment.

When V-MLPs’ underlying businesses are in the sweet spot, these names can deliver big-time price appreciation and stratospheric yields of 20 percent to 30 percent; however, if business conditions deteriorate, it’s not unheard of for a V-MLP to omit its quarterly payout entirely.

Here’s our guide to the high risks and rewards in this niche segment of the MLP market.

The Search for Yield Compression

Despite the dramatic changes that have occurred in the universe of publicly trade partnerships since the 1980s, the basic appeal of this security class to investors has remained the same: above-average yields and significant tax advantages. 

But from  2011 to 2013, price appreciation accounted for an average of 87 percent of the total return posted by the top-performing MLPs from each year. Thus far in 2014, climbing unit prices have contributed about 93 percent of the total return posted by the top 10 publicly traded partnerships.

05/29/14: May Live Chat

Elliott Gue and Roger Conrad will host the Energy & Income Advisor’s  next Live Chat on May 29, 2014, at 2:00 p.m. ET. This is your opportunity to ask questions about the latest developments in the economy and energy patch.

Roger Conrad and Elliott Gue’s Top Energy Takeover Targets

Whole-company takeovers in the energy sector peaked in 2011, when companies completed almost $192 billion worth of deals.

Mergers and acquisitions activity in the energy patch has slowed in subsequent years, declining by 41 percent last year; however, the premiums paid in these deals have steadily increased in recent years–a boon for investors who own these names.

Over the years, we’ve amassed a solid track record of identifying takeover targets, including mining equipment producer Bucyrus International, Bakken operator GeoResources and artificial-lift specialist Lufkin Industries.

More recently, Energy XXI (NSDQ: EXXI) offered to purchase Model Portfolio holding EPL Oil & Gas (NYSE: EPL) for a premium of 33.4 percent.

Our Secret: Focusing on high-quality names that trade at reasonable valuations. Holding a name that can’t stand and grow on its own in the hope of a takeover isn’t a winning strategy.

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  • Live Chat with

    Elliott and Roger on May. 30, 2017

  • Portfolios & Ratings

    • Model Portfolios

      Balanced portfolios of energy stocks for aggressive and conservative investors.

    • Coverage Universe

      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

    • MLP Ratings

      Our assessment of every energy-related master limited partnership.

    • International Coverage Universe

      Roger Conrad’s coverage of more than 70 dividend-paying energy names.

    Experts

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Peter Staas

      Managing Editor: Capitalist Times and Energy & Income Advisor