Q. You’ve pointed out that many midstream companies and MLPs have doubled and even tripled off their late March lows. But even companies you’ve called best in class like Enterprise Products Partners (NYSE: EPD) are still down more than 30 percent from where they started the year. And they’re at a fraction of where they were in mid-2014 when oil was over $100 a barrel. When can we expect a full recovery or has the situation changed forever?
A. Back in summer mid-2014, energy midstream companies and MLPs were sold to investors as being practically as safe as regulated utilities, with earnings and dividends virtually unaffected by oil and gas price volatility. We never promoted that line. But neither did we expect to see it proven as spectacularly wrong as it has been the past six years or so, or that midstream companies and especially MLPs would sustain such reputational damage.
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Elliott and Roger on Feb. 25, 2021
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