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  • Roger S. Conrad

Looking for Value in MLP Land

By Elliott H. Gue on Jan. 29, 2014

Upstream master limited partnerships (MLP) underperformed the Alerian MLP Index last year, thanks to first-half weakness in the price of natural gas liquids (NGL).

A concentrated media campaign raising concerns about the Linn Energy LLC’s (NSDQ: LINE) hedging practices, maintenance capital expenditures and the quality of its assets also spooked individual investors away from the group.

But the completion of Linn Energy’s blockbuster acquisition of Berry Petroleum suggests that the Security and Exchange Commission won’t pursue large-scale accounting changes in this niche industry.

More important, units of our favorite upstream MLPs trade at favorable valuations, offer above-average yields and could enjoy a re-rating as volatile commodity prices prompt investors to gravitate toward heavily hedged names. A solid pipeline of potential asset acquisitions should also support distribution growth.

A number of the top-performing MLPs last year grew their distributions after a fallow period; we look at 15 names whose growth has stalled, highlighting the best values and the potential value traps.


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    • Elliott H. Gue

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

    • Roger S. Conrad

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