EMO: A Solid Midstream Fund Trading At A Huge Discount

Summary

• Midstream companies were devastated by the market's reaction to the pandemic, but the fundamentals are still quite strong.
• The fund's portfolio is fairly well diversified among the various midstream companies but I would have liked more exposure to natural gas.
• The global demand for both crude oil and natural gas is expected to increase over the next 20 years, with gas being the better of the two.
• The distribution appears to be sustainable at the level the fund cut too after prices collapsed.
• The fund has an enormous 18% discount to net asset value so the price certainly looks acceptable.
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Master limited partnerships, particularly in the midstream space, have long been favorites of income investors despite the weakness that the sector suffered in the aftermath of the outbreak of the pandemic. This is due to the fact that these companies tend to have

Analyst’s Disclosure:I am/we are long MPLX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.