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MLP IPOs have outperformed the S&P 500 by 35% over the past five years!



June 14, 2012 – Comments (2) | RELATED TICKERS: NFG , PSX , SRE


I was going to call this article "A Solid Pipeline of MLP IPOs" HA, like the pun ;)?  Many of the companies that are MLPs own pipelines.  Oh, that's rich.  Investing humor is the best kind of humor right?  OK, maybe not.  The statistic that I came up with was so amazing that I had to use it instead.

Anyhow, I just came across an outstanding article about the number of MLP IPOs that are scheduled to happen over the next several months.  As someone who has extolled the virtues of dividend-paying IPOs numerous times in the past I naturally found this article fascinating.

Many of the new MLPs that are scheduled to start trading in the coming months probably won't interest me, including ones that involve coal (which is in big trouble with the glut of cheaper, cleaner nat gas out there), refiners and mortgages...though I suppose I would buy almost anything that didn't offend me morally at the right price.

Not only does this article provide a list of the potential MLP IPOs that may hit the market in the near provides definitive proof that my theory about the outperformance of such companies is correct.  Over the past five years 41 MLPs have had IPOs.  Collectively these IPOs have yielded an average return of 26.1%.  This compares with a drop of 8.98% in the S&P 500 over the same time period.  So over the past half-decade MLP IPOs have outperformed the S&P 500 by 35.08%!  Of course, I'm ruining this phenomenon by telling everyone about it, but that's how generous I am :).

As if this article wasn't amazing enough already, at the end it provides a list of companies that have discussed potentially spinning off assets into MLPs at some point in the future.  Those companies are a fertile hunting ground of investment ideas.  That sort of catalyst is definitely one of the things that I look for in a potential investment.

The companies mentioned include:

CenterPoint Energy (CNP)
Dominion Resources (D)
Delek US Holdings (DK)
Magnum Hunter Resources (MHR)
Marathon Petroleum Corp. (MPC)
National Fuel Gas (NFG)
NiSource (NI)
Northern Oil & Gas (NOG)
Phillips 66 (PSX)
SeaDrill (SDRL)
Sempra Energy (SRE)
SunCoke Energy (SXC)
Tsakos Energy Navigation (TNP)
Unit Corp. (UNT)

Again, not all of these companies interest me, but a few that caught my eye right off the bat include the subjects of my last two posts Phillips 66 and National Fuel Gas.  This makes them even more attractive from my perspective.

Companies that I am now going to look more closely at now include CenterPoint (4.0% dividend yield), Dominion (4.0%), NiSource (3.8%) and Sempra Energy (3.6%) - this one also popped up on my radar a week or so ago while I was researching LNG.  Interesting, they are all power companies that pay investors solid dividends to wait until they potentially unlock undervalued assets through a spin-off to shareholders or an IPO.  I'll need to research if the assets that are potential spin candidates are large enough to move the needle for some of these companies...which are fairly large.  Is anyone out there bullish on any of them?  I'd love to hear your thoughts.

That's all I have for now.  Here's a link to the article that I was talking about.  Kudos to Peter Staas, whoever you are, on writing a great piece.

A Robust Pipeline of MLP IPOs

Thanks for reading.  Have a great evening!


2 Comments – Post Your Own

#1) On June 15, 2012 at 12:37 AM, awallejr (28.94) wrote:

I am an absolute fan of MLPs.  I have been touting them since 2009 crash.  You could have bought em all at insane prices.  The ones I own are so solid green in my account that Cramer would say sell sell sell, but I refuse. The distributions keep on coming and I am not buying Tbills. 

The ones I have owned now for years are BBEP, PVR (this one is interesting since people think it a coal company and it no longer is), MMLP, BWP, and SDRL.  They still sport high and growing distributions that I urge many to at least take a look at them.

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#2) On June 15, 2012 at 12:41 AM, awallejr (28.94) wrote:

As a further comment, what I also like about them is that they own things. You have pipelines and processing plants and storage facilities.  And I love owning "stuff."

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