Author Archive for: Simon Lack
Entries by Simon Lack
Growth & Income? Try Pipelines
The chart below is a sobering one for pipeline investors. Over the past five years, the S&P has returned 13.1% p.a., versus -2.7% for the Alerian MLP Infrastructure Index (AMZIX). An allocation to AMZIX contributed almost a 16% p.a. performance drag, such that $100 invested in the S&P500 in July 2013 would now be worth […]
It’s the Distributions, Stupid!
Jim Carville’s admonition during Bill Clinton’s 1992 run for President was, “It’s the economy, stupid!” In its August 2018 edition, The Utility Forecaster warns readers to approach MLPs “with caution.” Too risky for income investors is their conclusion. MLP buyers have been badly abused, and Chief Investment Strategist Robert Rapier reminds readers of the many […]
Running Pipelines is Easy
“A monkey could make money in this business right now.” Kelcy Warren, Energy Transfer Partners CEO, August 2nd, 2018. Presumably when Energy Transfer Partners (ETP) announces earnings next week they’ll be good. That was the clear message in the attention grabbing combination of ETP with its General Partner (GP), Energy Transfer Equity (ETE). The 1.28 […]
Uncle Sam Helps You Short AMLP
The Alerian MLP ETF (AMLP), with its tax-burdened structure (see AMLP’s Tax Bondage), is by design unable to come close to the return on its benchmark, the Alerian MLP Infrastructure Index (AMZI). Because AMLP doesn’t qualify for treatment as a Regulated Investment Company (RIC), it’s subject to corporate income taxes just like any other corporation. […]
FERC Boosts MLPs
The Federal Energy Regulatory Commission (FERC) became MLP investors’ new BFF last week. Only four months ago, FERC’s revised policy on allowing imputed tax expense in setting tariffs caused a memorable intra-day 10% drop and contributed to dismal 1Q performance (see FERC Ruling Pushes Pipelines Out of MLPs). Ever since, MLP investors have regarded FERC […]
Is Shale Driving Oil Higher?
Could the Shale Revolution be driving oil prices higher? It seems counter-intuitive – the U.S. is on course to be the world’s biggest oil producer by next year. And it was the additional shale supply that led to the 2014-15 oil collapse. Yet, a growing chorus of industry voices is warning of an impending supply […]
New Pipeline Investment Roars Back
In recent years as MLP investors balked at providing the growth capital sought by midstream energy infrastructure, the biggest companies have been converting to corporations (see MLPs Searching for a New Look). The collapse in MLPs during 2014-15 slowed investment, subsequently causing many of the biggest companies to simplify as they concluded that the MLP […]
Old Style MLP Funds Get Left Behind
Although MLPs are cheap by historical standards, the persistence of their attractive valuation should prompt observers to think a little harder. The almost 5% yield spread between the Alerian MLP Index and ten year treasuries is 1.5% wider than the 20-year average of 3.5%. However, the MLP yield spread to treasuries has been historically wide […]
How to Profit From MLPs Overnight
A few months ago the NYTimes ran an interesting piece on the difference between intra-day and overnight returns on the stock market. The article compared a strategy of buying on the open and selling every day at the close (“IntraDay”), with a strategy of buying on the close and selling the next morning at the […]
