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April 14, 2011

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Institutional Ownership Stats

Someone recently brought up to me that given how few MLPs there are (80 or so), and given all the new money flowing into the space, doesn’t that necessarily mean that valuations get out of whack.  The classic case of two much money chasing too few ideas, particularly when the mandate of these funds is specific to MLPs.  So, I am trying to figure out just how many MLP vehicles there are now days and just how much money they have under management.  That’s a difficult thing to figure out, particularly when many MLP institutions have private investment vehicles like hedge funds that don’t really report AUM specific to MLPs.
Just off the top of my head, there are probably 15 closed end funds of varying sizes, I count 7 ETNs, ranging in AUM as of 3/31/2011 from $2.6 billion for AMJ down to $13.9 million for MLPG.  Then there are closed end mutual funds, which collectively are approaching $1 billion in AUM.  Add in the ETF AMLP at around $1.0 billion as well.  A lot of different vehicles, with varying reporting and AUM.
So rather than do that, let’s take a macro approach.  Lehman Brothers Equity Research Barclays Equity Research puts out its estimate of institutional ownership percentages in a weekly report.  They put the current number at around 27.5%.  They also estimate the total float of MLPs at around $245 billion.  That means there is around $67 billion in institutional money invested in MLPs right now.  That seems like a really big number, but as a percentage, there is still plenty of room for them to get over-owned institutionally.  That $67 billion also doesn’t include firms like Curbstone that manage separate accounts, so our MLP holdings show up as retail ownership, not that our numbers really change the picture, but added together with other firms like mine and big brokers managing separate accounts at wire-houses, its probably a very big number.
Anyway, food for thought.  See below for a breakdown by sector of the ownership percentages, midstream MLPs are the most institutionally owned.  E&P and coal are the least owned, E&P is surprising to me, but that’s a relatively new subsector of the space.

This second chart highlights which MLPs are most heavily owned by institutions and which aren’t.  APU, CLMT and FGP are not surprising at all.

Source: Barclays Equity Research.
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