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Friday, March 25, 2011


Seeking Alpha has a very interesting piece on Energy Transfer Partners (ETP) and its recent purchase in conjuction with Regency Partners (RGNC). Could this be a game changer for Energy Transfer Partners?

The piece argues that the recent asset purchase may be the catylist that gets this mlp growing its distributions again and as we know with MLPS everything is about growing distribution. If you can't grow the payout, your stock price goes nowhere. And if you cut the payout you can say goodbye to your stock price in a big hurry. Energy Transfer Partners (ETP) has been a chronic underperformer relative to other mlps.

Energy Transfer Partners has pretty much performed in line with Nustar (NS) which is another MLP that has not been doing much thanks to a relatively stagnant payout. They have both underperformed thee S&P 500 for the last 2 years. Plains All American (PAA) is an example of a big mlp which has grown its payout and you can see that while it has underperformed the MLP index to some degree it has clearly outperformed the S&P 500, Nustar, and Energy Transfer. If the Seeking Alpha piece is right, then Energy Transfer Partners has a lot of grown to make up and could be a strong performer going foward. Note the piece is bullish (but a little less so ) on Regency (RGNC) as they are the smaller owner and have not been growing the payout . Those interested might wait for whatever equity offering is coming with the asset purchase as an entry point as the Seeking Alpha piece suggests.

Looks like we have firm futures ahead of the Friday open. Interest rates are slightly lower as is nat gas which sold off on inventory numbers yesterday. Crude is flat. No corporate news to speak of this morning and nothing that i can see so far on the upgrade downgrade list. The MLP index closed up 3 points yesterday and is one or 2 up days away from the top of the range. The overall market is pretty much in the same boat so we will see what happens soon as the markets approach their recent highs. Bulls continue to have the upper hand.

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