My latest weekly column is up at equities.com, click here to read it: MLP General Partners: A Lucrative Math Problem. Its a post that attempts to put some numbers around the multiplier effect of MLP general partner holdings companies (like KMI, TRGP, AHGP, etc.) that results from owning IDRs, but also the effect on the GP of serial equity issuance at the subsidiary level. I start by highlighting the consistent outperformance of the GPs and offered some potential reasons that GPs always seem undervalued.
For the math example, I used TRGP (general partner of NGLS). The final output was the chart below, which shows that if NGLS were to increase its distribution at a rate of 8% annually, and if NGLS issued $250mm in equity annually (NGLS has issued equity at a rate of $400mm+ for last 18 months), then the GP holding company would be able to increase its dividend at a 28.3% annual rate.
I hope you will click over and enjoy.