MASTER LIMITED PARTNERSHIPS

Thursday, August 07, 2008

Well considering the market headwinds MLPS are actually holding their own today. At least there is now free fall selling with downtick after downtick. The list is split...half up half down...most between +60 cents and minus 60 cents. Nothing really standing out.

7 comments:

Anonymous said...: We keep hearing about forced selling and hedge funds blowing up, yet there never seems to any facts in this regard.

One fact that I have unearthed is this. In the last 18 years MLP yield spreads have only been this high vs the 10yr twice before. In 2000 during the tech stock bubble/panic/selloff and in 2002 during the Enron fiasco. The average spread is slightly over 200bps, we are slightly over 400bps today. If you factor in foward distributions for 2009, you could get to 450bps or higher in a host of MLPs.

What this portends for the future, I have no idea? My hope is that eventually some investor with real money swoops in and buys these things.

I am not sure why I even bother trying to rationalize my MLP position.

My 2 cents,

Mr Pipes; 8/07/2008 1:19 PM
Anonymous said...: I would also add that GP yields and spreads have NEVER been at these levels. Granted the history and data is shorter.

Let's discuss...

Mr. Pipes; 8/07/2008 1:23 PM
Anonymous said...: Mr. Pipes,

I agree with you on GP yields. I have been buying GPs at these levels.

Bruce; 8/07/2008 1:27 PM
Anonymous said...: I listened to the WPZ conf call this morning and it was nothing but positive news. Its really incredible how the market just refuses to acknowledge the postive trends taking shape in the entire natgas logistics marketplace.

Volumes up, NGL processing up, gathering connections up, distribution up, everything up except the LP price. Its staggering.; 8/07/2008 1:55 PM
Anonymous said...: BPL is just a nightmare to own. This thing losses 2% every damn day on nothing.; 8/07/2008 2:24 PM
Anonymous said...: The fact is there is real fear of a systemic colapse taking down the banks ( and by extension everything else ).

The former "safe haven" yield plays... Reits, Preferred Stock, corporate bonds, and MLPs have all been taken out and shot by Mr. Market.

MLPs with good quarters and rising distros can't in this market trump fears based on macro trends.

MLPs will advance when the banking sector stabilizes. Unfortunately today, too many investors fear that it won't.; 8/07/2008 3:08 PM
Anonymous said...: Yes, but the operative words are "today" and "fear." Combined they are a lethal cocktail for sellers, but a buyer's dream. You just can't have truly great buying opportunities in the absence of angry, trembling, depressed sellers who have grown impatient with market irrationality. Gloom and doom is what creates buying opportunities, not happy gas.

And to those spitin’ mad souls who have "waited a whole year” for MLPs to turn around, I say then you’ve squandered 12-months of great dollar cost averaging action. But, even those folks can’t claim they weren’t paid well while they’ve waited.

For every action there's an equal and opposite reaction...; 8/07/2008 3:35 PM