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Hinds Howard
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I serve as the senior MLP research analyst for CBRE Clarion Securities, a global asset management firm based in Radnor, PA. My primary focus is on investing in Master Limited Partnerships (MLPs) within a larger infrastructure investment team.
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  • Week Thoughts: Deck the Halls with MLP Equity 0 comments
    Dec 11, 2011 1:23 PM | about stocks: EPD, NS, RRMS, RNO

    Another week, another billion dollars of MLP equity issued.  Its sort of like when a month ago, I accidentally placed the same large Christmas gift order from Amazon 6 times (I never got to a confirmation page, so I just kept clicking, never a good idea...).  Over the course of the next week following the order, the boxes (filled with the same stuff) kept piling up.  We eventually printed all the return slips and made several trips to UPS to send the boxes back, but for a while it felt like it would never end (and it confused the hell out of my young kids, as if Christmas wasn't confusing enough already).

    The MLP equity deals seem like they won't stop either.  There were 4 this week: 2 IPOs (MEMP and RRMS) and 2 follow-ons (EPD and NS), for a total of $1.035 billion in gross proceeds.  Nonetheless, MLPs had a decent week, continuing the recent trend of barely flinching in response to mountains of new paper.  The MLP Index finished the week flat, compared with a slightly positive week for the S&P 500, despite back to back 20+ point S&P 500 days to end the week as the not so bad economic news here remains in conflict with the mess in Europe.

    The two follow-ons traded well, particularly EPD, which closed Thursday above issue price, despite strong market headwinds that sent the MLP Index down 1.3% (although EPD represents a fairly large percentage of the MLP Index, and it was down from the prior close more than 2%).  The IPOs both traded poorly, although RRMS was at one point up 4.5% before drifting all the way back down to its IPO price.

    Poor IPO trading is evidence of some fatigue in a IPO market that has been very busy this year.  Its not over, either, with 2 more IPOs  set to price next week for a combined $428 million in planned gross proceeds.   With the late flurry of IPOs, this year will be tied with 2007 for the most active ever for pure MLPs (i.e. not including GP holding company IPOs that proliferated in 2006) with 13 total MLP IPOs.  6 of those IPOs will have come in the 4th quarter, and 4 in the last month, tying this month for the most active 30 day period in the history of the sector, only surpassed in gross proceeds by the October / November period of 2007, as shown in the table below.

    If the 2 announced IPOs get done next week at the midpoint, a total of $4.6 billion in equity will have been raised in the 4Q2011, more than twice as much as was raised in 3Q2011...

    Click here to read the rest

    Stocks: EPD, NS, RRMS, RNO
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