Entries by Simon Lack

The Virus Infecting MLPs

Closed end fund investors are passionate about the product. Because they generally own a portfolio of publicly traded securities, their NAV per share is easily calculated. The fixed share count means their share price can deviate from the NAV, and this attracts investors keen to buy something for less than it’s worth. MLP closed end […]

Enbridge Fireside Chat

Earlier today Enbridge (ENB) CEO Al Monaco held a “virtual fireside chat” with an analyst from RBC. ENB, like the other Canadians, is run more conservatively than many U.S. businesses. We’ve often noted that a bit more Canadian management would be beneficial in the U.S. energy sector. The slides below are from the ENB presentation […]

Updating the Coming Pipeline Cash Gusher

Almost a year ago, we published The Coming Pipeline Cash Gusher. Midstream energy infrastructure companies, especially MLPs, have long relied on Distributable Cash Flow (DCF) as a measure of profits available for distributions. As the funding needs of growth projects increased, the difference between DCF and Free Cash Flow (FCF) became stark. FCF is a […]

Planting a Cooler Climate

A little noticed sentence in President Trump’s State of the Union speech was that the U.S. would join the Trillion Trees Initiative. He didn’t mention climate change – most people like trees anyway, and the link was obvious. But planting trees to combat climate change is so seductively simple that it must be impractical. A […]

U.S. Natural Gas Helps Lower Emissions Again

Blackrock’s ESG funds hold positions in pipeline corporations, consistent with Larry Fink’s recent letter on climate change (watch ESG Investors Like Pipelines). Their inclusion is entirely appropriate. The International Energy Agency recently announced that global CO2 emissions last year were flat, at 33 gigatonnes (a gigatonne is 1 billion metric tonnes). The U.S. lowered emissions […]

Today’s Pipelines Leave MLPs Behind

Last week Kelcy Warren, CEO of Energy Transfer (ET), defended the MLP structure. He’s definitely correct that MLPs possess a powerful tax advantage over corporations, in that their profits are only taxed at the investor level. Tax-deferred income free of the double-taxation to which corporate profits are subject is very appealing, and for years it […]

Crude Catches a Virus

We’re in one of those times when everything is a macro call. Stocks and sectors are, for now, more highly correlated, since Coronavirus developments are dominant. Click here for some cool graphics illustrating its spread. The recent recovery in stocks echoes the information on the link. We won’t attempt to offer any insight on the […]

Kinder Morgan’s Slick Numeracy

A Chief Financial Officer needs to know her way around a financial statement. Presenting operating performance in the best possible light is a highly valuable skill. We watched Kinder Morgan’s (KMI) Analyst Day last week via webcast, and my admiration is split between (1) KMI President and former CFO Kim Dang’s deft maneuvering among numbers, […]