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I am a private investor who has invested in individual stocks for over a decade. I have a BBA from the University of Texas at Austin. I am retired and living off of dividends and distributions from a portfolio of BDCs, consumer staple stocks, MLPs, regional banks and REITs.
  • Midstream MLP Stats 5-09-14 6 comments
    May 11, 2014 9:52 AM

    1. With the exception of SEP, all MLPs were credited with their calendar Q2-14 distributions in the spreadsheet below.

    2. After years of writing that "growth sells at a discount" because it is the "two birds in the bush" while yield is "the bird in the hand" - I am very hesitant to write that now. The unit prices of the growth MLPs have boomed in 2014.

    3. The change in the target prices of the growth MLPs is also booming. Notice the changes in the targets for EQM, MMP, OILT and SXL.

    4. After years of being in the dog house, NS is on the way to recovery - and the change in the target price is showing that recovery. NS still sells at a low "yield + CAGR" when using a short term CAGR. But the CAGR projections are growing from zero to moderately anemic.

    5. Do target prices lead market prices - or do market prices lead target prices? After years of watching, I still can not tell. The cynic in me wants to believe that market prices cause the analysts to change their targets - and change them quickly. But there are always a few exceptions where the targets are rising while the market prices are not. The academic in me wants to believe it is all about the change in the CAGR projections. The companies report their earnings - and based on that data, the market and the analysts are in step with each other in the changes in their growth projections.

    6. Why have MLPs out performed in 2014? Here is my current thinking. REITs are doing even better than MLPs in 2014 - and REITs are interest rate sensitive. The yield on the ten year treasury has fallen in 2014 - so REITs have done well. There is also a decent correlation between MLPs and interest rates. So it is very probably than MLPs have out performed because interest rates have fallen.

    7. No one knows where interest rates are headed. In recent years, it has been a decent bet to go against the consensus. And I believe that the consensus believes that interest rates can not fall much lower. I believe that too - but I believe it without much conviction.

    8. So --- what should you do with "new money"? I would say to diversify. Be agnostic about the future direction of interest rates. For any REIT or MLP purchase - buy something that will tend to rise as the economy heats up and interest rates rise. Be "half right" about something.

    The data:

    MLP Midstream 05-09-14

    The consensus DCFs were last updated on 05-10-14. The CAGR projections were updated 4-09-14. Yields are based on the Q2-14 distribution. Under the 'year to date' header, the change in the distribution is the change since Q2-13 - or the change over the last twelve months. The change in the target, EPS, DCF and CAGR is the percentage change in the consensus 2014 projection that has happened since the beginning of the year.


    Company   Current Distrib/ Q2 Dist Dist/dcf Dist/dcf Year-to-Date Percent Change
        Price Quarter Yield 2014 2015 Price Pr+Dist EPS Target DCF Dist* cagr

    Access Midstream Partners, L.P. (NYSE:ACMP) 58.88 0.5750 3.91 67.65 65.53 4.07 6.10 6.21 12.34 5.59 23.13 0.00
    American Midstream Partners, LP (NYSE:AMID) 27.43 0.4625 6.74 97.88 80.43 1.29 4.71 0.00 7.32 -8.70 6.94 33.33
    Atlas Pipeline Partners, L.P. (NYSE:APL) 31.60 0.6200 7.85 95.38 87.32 -9.84 -6.31 -83.81 -14.46 -11.86 5.08 0.00
    Blueknight Energy Partners, L.P. (NASDAQ:BKEP) 8.99 0.1300 5.78 49.52 34.67 5.64 8.70 -35.85 0.00 1.94 10.64 0.00
    Buckeye Partners, L.P. (NYSE:BPL) 76.82 1.1000 5.73 96.07 87.48 8.18 11.28 1.08 8.63 -2.55 4.76 20.00
    Boardwalk Pipeline Partners, LP (NYSE:BWP) 15.92 0.1000 2.51 23.26 24.10 -37.62 -37.23 -31.40 -40.44 -13.13 -81.22 0.00
    Crestwood Midstream Partners LP (NYSE:CMLP) 21.92 0.4100 7.48 90.11 80.39 -11.93 -8.64 12.50 -5.30 -1.62 3.80 16.67
    DCP Midstream Partners LP (NYSE:DPM) 53.64 0.7450 5.56 91.41 82.09 6.53 9.49 -4.58 4.82 -0.91 6.43 0.00
    El Paso Pipeline Partners, L.P. (NYSE:EPB) 33.11 0.6500 7.85 100.78 94.89 -8.03 -4.42 -16.99 -12.00 0.00 4.84 8.70
    Enbridge Energy Partners, L.P. (NYSE:EEP) 29.55 0.5435 7.36 106.57 100.18 -1.07 2.57 -16.07 -3.16 -3.77 0.00 0.00
    Enterprise Products Partners L.P. (NYSE:EPD) 73.10 0.7100 3.89 67.94 64.99 10.26 12.40 3.02 9.81 0.72 5.97 0.00
    Energy Transfer Partners, L.P. (NYSE:ETP) 56.12 0.9350 6.66 80.78 84.81 -1.97 1.29 6.17 3.51 -1.28 4.62 8.11
    EQT Midstream Partners, LP (NYSE:EQM) 76.37 0.4900 2.57 61.44 52.27 29.90 31.57 1.91 35.54 2.90 32.43 1.05
    Exterran Partners, L.P. (EXLP) 28.85 0.5375 7.45 82.06 89.21 -4.57 -1.01 -17.46 7.00 0.38 3.86 0.00
    Genesis Energy LP (NYSE:GEL) 54.94 0.5500 4.00 86.61 66.47 4.51 6.60 -10.16 5.24 -13.61 10.55 0.00
    Holly Energy Partners L.P. (NYSE:HEP) 33.96 0.5075 5.98 91.44 82.86 5.04 8.18 -1.69 1.18 1.37 6.28 0.00
    Kinder Morgan Energy Partners, L.P. (NYSE:KMP) 73.92 1.3800 7.47 95.50 94.20 -8.36 -4.93 2.57 -4.95 0.87 6.15 -31.91
    Magellan Midstream Partners LP (NYSE:MMP) 78.14 0.6125 3.14 74.02 67.12 23.50 25.44 3.96 30.25 7.82 20.69 2.27
    MarkWest Energy Partners, L.P. (NYSE:MWE) 63.40 0.8700 5.49 81.88 74.68 -4.13 -1.50 -24.69 -7.49 -2.07 4.82 -19.54
    Targa Resources Partners LP (NYSE:NGLS) 61.63 0.7625 4.95 76.44 70.93 17.84 20.76 17.22 13.17 13.68 9.32 0.00
    NuStar Energy L.P. (NYSE:NS) 57.33 1.0950 7.64 113.77 98.21 12.43 16.73 3.76 20.88 1.05 0.00 0.00
    ONEOK Partners, L.P. (NYSE:OKS) 54.95 0.7450 5.42 90.03 82.09 4.37 7.20 2.97 4.34 -0.90 4.20 0.00
    Oiltanking Partners, L.P. (NYSE:OILT) 86.22 0.4950 2.30 57.23 54.10 38.91 40.50 -4.61 35.24 22.70 22.22 16.88
    Plains All American Pipeline, L.P. (NYSE:PAA) 57.17 0.6300 4.41 84.28 79.25 10.43 12.86 -8.24 2.35 -4.47 9.57 0.00
    Regency Energy Partners LP (NYSE:RGP) 27.67 0.4800 6.94 91.87 84.21 5.37 9.03 1.92 3.74 0.97 4.35 25.00
    Spectra Energy Partners, LP (NYSE:SEP) 52.42 0.5563 4.24 83.97 89.01 15.59 16.82 0.00 8.47 2.71 10.97 0.00
    Sunoco Logistics Partners L.P. (NYSE:SXL) 92.55 0.6950 3.00 62.75 59.15 22.62 24.46 -4.33 27.22 -3.90 21.40 1.12
    TC PipeLines, LP (NYSE:TCP) 49.95 0.8100 6.49 85.04 81.82 3.14 6.48 0.86 2.96 2.97 3.85 0.00
    Tesoro Logistics LP (NYSE:TLLP) 67.96 0.5900 3.47 80.00 73.07 29.84 32.10 -13.08 14.63 -3.91 20.41 0.00
    Transmontaigne Partners L.P. (NYSE:TLP) 47.63 0.6600 5.54 70.59 77.65 12.07 15.18 0.90 2.09 6.86 3.13 0.00
    Western Gas Partners LP (NYSE:WES) 70.10 0.6250 3.57 75.99 65.10 13.63 15.66 -3.03 7.15 7.87 15.74 0.00
    Williams Partners L.P. (NYSE:WPZ) 52.55 0.9045 6.88 95.21 93.97 3.32 6.88 -1.40 -0.77 6.44 6.73 0.00
    EnLink Midstream Partners, LP (NYSE:ENLK) 29.95 0.3600 4.81 92.90 76.60 8.51 11.12 -23.91 15.02 -1.27 9.09 0.00

    Pipeline Average     5.37 81.83 75.72 6.35 9.09 -7.16 5.89 4.87 6.69  
    Shipping
    Navios Maritime Partners L.P. (NYSE:NMM) 18.42 0.4425 9.61 111.32 97.25 -3.66 0.97 -2.74 7.55 -9.14 0.00 0.00
    Martin Midstream Partners LP (NASDAQ:MMLP) 41.00 0.7875 7.68 93.75 77.78 -4.21 -0.53 -3.75 -0.90 -3.45 1.61 0.00
    Teekay LNG Partners LP. (NYSE:TGP) 43.48 0.6918 6.36 94.12 90.73 1.80 5.04 6.07 -1.07 -0.34 2.49 0.00

    Shipping Average     7.89 99.73   -2.02 1.83 -0.14 1.86    

    MidStream Average   5.58 83.32 76.79 5.65 8.49 -6.57 5.55    

    The (price change only) Alerian MLP index [the ^AMZ - which includes other MLP sectors] is 4.40% year to date.
    The Alerian MLP index ETN AMJ is 5.65% and with dividends is 6.87%.
    The S&P500 index ETF SPY is 1.77% and with dividends is 2.22%.
    The Russell 2000 index ETF IWM is -4.62% and with dividend is -4.36%.
    With the 10yr Treasury @ 2.63% & the sector average yield [on Q2 distrib's] at 5.58% - the spread is 295 bps.
    With the JNK yielding 5.79% - spread to the Lehman U.S. High Yield Index is -22 bps.
    With the HYG yielding 5.82% - the spread to the iBOXX High Yield Index is -24 bps.

    Historical MLP Month-End Yields:

    Jan 05: 5.97% Feb: 6.10% Mar: 6.07% April: 6.15% May: 6.16% June: 6.03%
    July 05: 5.87% Aug: 6.10% Sept: 6.07% Oct : 6.45% Nov: 6.79% Dec: 6.92%
    Jan 06: 6.56% Feb: 6.68% Mar: 6.56% April: 6.68% May: 6.76% June: 6.82%
    July 06: 6.61% Aug: 6.65% Sept: 6.70% Oct : 6.58% Nov: 6.44% Dec: 6.28%
    Jan 07: 6.05% Feb: 5.96% Mar: 5.77% April: 5.54% May: 5.54% June: 5.43%
    July 07: 5.44% Aug: 6.05% Sept: 6.26% Oct : 6.20% Nov: 6.64% Dec: 6.70%
    Jan 08: 6.79% Feb: 6.79% Mar: 7.43% April: 7.08% May: 7.44% June: 7.56%
    July 08: 8.16% Aug: 8.45% Sept: 10.76% Oct : 11.73% Nov: 16.53% Dec: 19.50%
    Jan 09: 14.76% Feb: 14.54% Mar: 13.90% April: 14.66% May: 9.80% June: 9.59%
    July 09: 8.39% Aug: 8.61% Sept: 7.96% Oct : 7.84% Nov: 7.62% Dec: 7.13%
    Jan 10: 6.64% Feb: 6.50% Mar: 6.34% April: 6.23% May: 6.71% June: 6.27%
    July 10: 5.85% Aug: 6.14% Sept: 5.89% Oct : 6.14%* Nov: 6.00% Dec: 5.79%
    Jan 11: 5.87% Feb: 5.62% Mar: 5.65% April: 5.59% May: 5.95% June: 5.90%
    July 11: 6.21% Aug: 6.73% Sept: 7.10%** Oct : 6.51% Nov: 6.80% Dec: 6.45%
    Jan 12: 6.45% Feb: 6.43% Mar: 6.43% April: 6.42% May: 7.26% June: 7.06%
    July 12: 6.81% Aug: 6.87% Sept: 6.75% Oct : 6.79% Nov: 7.08% Dec: 7.31%
    Jan 13: x.xx% Feb: x.xx% Mar: x.xx% April: x.xx% May: x.xx% June: 6.14%
    July 13: 6.18% Aug: 6.51% Sept: 6.39% Oct : 6.34% Nov: 6.21% Dec: 5.77%***
    Jan 14: 5.92% Feb: 5.84% Mar: 5.69% April: 5.64% May: June:

    * The increase in month end yields occurring in the October 2010 stats was mainly due to APL and XTEX re-starting distributions, and not due to a decrease in the unit prices of the MLPs. And the same cause was evident in the increase in the MLP to ten year treasury spread.
    ** The deletion of low yielding DEP from the data base added 7 bps to the sector average yield.
    *** The deletion of high yielding EROC combined with the addition of low yielding EQM, OILT and TLLP to the coverage universe subtracted about 20 bps to the sector average yield. Historical MLP to 10 Year Treasury Spreads:

    Jan 05: 178 Feb: 152 Mar: 156 April: 195 May: 216 June: 211
    July 05: 159 Aug: 208 Sept: 174 Oct : 177 Nov: 230 Dec: 252
    Jan 06: 206 Feb: 213 Mar: 171 April: 161 May: 164 June: 167
    July 06: 161 Aug: 192 Sept: 206 Oct : 198 Nov: 198 Dec: 158
    Jan 07: 123 Feb: 138 Mar: 122 April: 89 May: 65 June: 40
    July 07: 71 Aug: 152 Sept: 167 Oct : 172 Nov: 269 Dec: 267
    Jan 08: 319 Feb: 327 Mar: 401 April: 335 May: 338 June: 358
    July 08: 420 Aug: 463 Sept: 694 Oct : 801 Nov: 1360 Dec: 1728
    Jan 09: 1191 Feb: 1152 Mar: 1294 April: 1154 May: 634 June: 606
    July 09: 491 Aug: 551 Sept: 488 Oct : 485 Nov: 443 Dec: 329
    Jan 10: 305 Feb: 288 Mar: 251 April: 257 May: 341 June: 333
    July 10: 294 Aug: 367 Sept: 337 Oct : 354 Nov: 321 Dec: 250
    Jan 11: 250 Feb: 224 Mar: 219 April: 230 May: 289 June: 273
    July 11: 341 Aug: 454 Sept: 518 Oct : 439 Nov: 472 Dec: 457
    Jan 12: 457 Feb: 421 Mar: 421 April: 450 May: 570 June: 546
    July 12: 534 Aug: 531 Sept: 511 Oct : 510 Nov: 546 Dec: 555
    Jan 13: Feb: Mar: April: May: June: 366
    July 13: 360 Aug: 373 Sept: 378 Oct : 379 Nov: 347 Dec: 274
    Jan 14: 327 Feb: 319 Mar: 304 April: 299 May: June:

    Disclosure: I am long CMLP, DPM, EPD, GEL, KMP, MMP, MWE, WES.

    Additional disclosure: I also have investments in the general partners of PPA, NGLS and WPZ.

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Comments (6)
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  • Scooter-Pop
    , contributor
    Comments (4943) | Send Message
     
    Facto...
    Do you have any concerns Dist/dcf will begin eroding in the MLP space?
    11 May 2014, 03:40 PM Reply Like
  • Factoids
    , contributor
    Comments (1266) | Send Message
     
    Author’s reply » Do I have concerns about eroding Distribution/DCF ratios? There are a few stocks with problems - but the sector is in good shape. The fall in the distribution messes up the sector stats for the large cap stocks - so let's look at the data for the small cap midstream and the G&Ps. LTM distribution growth has been 12.16% for the small caps. That's huge. But 2014 DCF growth averages 12.84%. LTM distribution growth has been 10.92% for the G&Ps - and 2014 DCF growth is projected at 17.16%. DCF growth for 2015 is projected to be over 10% for both of those sub-sectors.

     

    I make my own DCF projections - which are more or less consensus numbers from the brokerages. There is a lot of fluctuation in those numbers from the individual brokerages. Most often - an upgrade is partially cancelled out by a downgrade by another brokerage -- so the fluctuations are muted in a consensus number. Bottom line - DCF projections are volatile. The growth that is projected today can dissipate. Remember that warning. But -- the projections that I have today tells me not to fear eroding Distribution/DCF ratios.

     

    What does that mean? (target audience - those who are weak on metrics) It means that - in general - the current trend in stong distribution growth should continue.
    11 May 2014, 04:16 PM Reply Like
  • Willie119
    , contributor
    Comments (39) | Send Message
     
    Factoids,

     

    Can you clarify why in several of your posted spreadsheets on MLPs I see that ACMP's CAGR usually showing up as 0.00? (I'm presuming this is the compound annual growth rate of their distribution.) I've owned these units for awhile and have seen some growth in their distributions. Is it showing up as 0.00 because you're not able to acquire the data, therefore you show 0.00 when you've got no data to compute the cell's value?

     

    Regards,
    W
    4 Dec 2014, 07:25 PM Reply Like
  • Factoids
    , contributor
    Comments (1266) | Send Message
     
    Author’s reply » Willie119 -- the 0.00 number under CAGR for ACMP is the year to date CHANGE in the CAGR. I had not changed my CAGR projection for ACMP between the start of the year and the time this spreadsheet was posted.

     

    All of the metrics in the 'year to date' spreadsheet on the right hand side capture the percent change since the start of the year -- and those numbers should be used to explain difference in year to date unit price appreciation.
    4 Dec 2014, 07:54 PM Reply Like
  • Willie119
    , contributor
    Comments (39) | Send Message
     
    Thanks, its obvious now that you spell it out for me!

     

    I guess what my brain was wrapped around is that I was thinking its more important to know what the CAGR is for these MLPs (to help gauge goodness or badness as a prospective investment). Its seems somewhat difficult to make those kind of assessments (in regards to CAGR) with knowing just the change in CAGR. For example, a minus 10% (decreasing CAGR) could still result in a very nice overall CAGR. Perhaps I'm still missing something fundamental?
    5 Dec 2014, 08:49 AM Reply Like
  • Factoids
    , contributor
    Comments (1266) | Send Message
     
    Author’s reply » Willie wrote "I was thinking its more important to know what the CAGR is for these MLPs (to help gauge goodness or badness as a prospective investment)."

     

    I show CAGRs in multiple spreadsheets. The "year to date" spreadsheet has the purpose of answering "what has changed since the beginning of the year to account for the varying changes in prices?" To answer that question, the CHANGE in the CAGR is the metric that is needed.

     

    I show my CAGR is the "Yield + CAGR Total Return Expectations" spreadsheet. That spreadsheet also shows the two price-implied CAGRs. It shows my RRR assessments. It is that spreadsheet that is the tool one should use to "gauge the goodness". That spreadsheet is posted in my InstaBlog of 9-22-14.

     

    I hope you have read the retirement portfolio for dummies series and seen the "long term metric trends" spreadsheet. That spreadsheet attempts to answer the question "Is my CAGR projection right?" It also answers the question "Does the earnings/distribution ratio matter?".

     

    I produce a lot of spreadsheets -- few of them are posted on my InstaBlog. The "year to date" spreadsheet appears to satisfy a large audience without giving away too much information. So that is the one I most often post.

     

    The "Yield + CAGR Total Return Expectations" spreadsheet is the one that answers most questions (and the most important questions). I try to post it at least once per quarter -- and I try (for self-serving reasons) to reserve it for a message where I am being compensated.
    5 Dec 2014, 09:17 AM Reply Like
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