×
Triangles background
OUR COMPANY AND AFFILIATES
CBRE GLOBAL INVESTORS

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers providing real estate and infrastructure investment solutions to over 500 clients worldwide.

INVESTMENT MANAGEMENT

CBRE Global Investors

CBRE Clarion Securities

CBRE Caledon Capital Management

Trammell Crow Company

MLPguy
CBRE GROUP

CBRE Global Investors is the investment management division of CBRE Group, Inc. the world’s premier commercial real estate services and investment firm.  The company’s shares trade on the New York Stock Exchange under the symbol “CBRE.”

REAL ESTATE SERVICES

CBRE

CBRE Blueprint
Our Company and Affiliates

This website uses cookies to improve the user experience. By using our website you consent in accordance with our Cookie Policy. Read More

ACCEPT
Triangles background
Back to Insights

December 22, 2012

Viewed 612 times

MLP Week Thoughts: 2012 As Good As Gold

The Alerian MLP Index was up 2.3% this week, including 1%+ days Tuesday and Wednesday, to snap the two week slump MLPs have seen since the beginning of December.  At this point, the MLP Index is down 2.5% for the month of December, but remains up 5.5% for the year (all of that total return coming from distributions as on a price basis the index is down for the year).  Barring a big week, MLPs will finish December negative, making it two straight negative months to finish the year, which hasn’t happened since 2008 (also the last time we finished with one negative month to end the year).
MLPs were helped in their outperformance this week by strength in oil, natural gas and NGL prices.  Both propane and ethane had strong weeks, around +10% each.  Ethane’s bounce came off of multi-year lows, and no matter if it bounces another 10% by the end of the year, it will still have been a very rough year for NGLs.
Weekly Review_12-21-12
Prior to Friday, when MLPs got fiscally cliffed again, MLPs had been up 3.3% for the week, which would have been the best week since late June.  But we’ll take +2.3% any week.  Given that we will see no more equity this year, and given the underperformance in 2012, I expect to see MLPs float higher in the last week and close the year roughly where they were at the end of November, if not slightly less. Many more thoughts on 2013 next week.
Gold was down 2.2%, and coincidentally is +5.5% year to date just like the Alerian MLP Index.  Gold is viewed as an inflation hedge or hedge against monetary Armageddon, neither of those things happened in 2012, and gold hasn’t done much of anything this year.  MLPs have been a pretty good hedge against anything the last 20 years or so, and they remain one of the most attractive yield plays out there.  Gold doesn’t yield anything, but owning it does yield some warm and fuzzy feelings and helps you sleep well at night, even if its a little uncomfortable poking up from inside your mattress.
With only 5 trading days left, the MLP Index is still trailing the broader stock market by more than 1000 basis points year to date, but is tied with gold at +5.5%.  The unweighted average of variable distribution MLPs and GPs both have produced higher total returns than other MLPs and the S&P 500.  2012 will be remembered by me as the year of the variable distribution MLP.  Sure some of them launched last year, but the sector really took off in 2012, on the back of strong fertilizer and refining margins.
MLPs_World_12-21_YTD
Winners & Losers
GLP led the winners this week, which were predominantly smaller, more thinly traded MLPs that were eager for a bounce on MLP strength.  PVR was up on news that it would be replacing XTEX in the Alerian MLP Infrastructure Index this Friday.  Most of the gains were just getting back to even.  After GLP’s big week, it closed at $25.44, the same price it closed at on November 23rd.

Top5Bottom5MLPs_12-21

On the downside, NRGY was down all week on huge volume after it was announced that it would be removed from the Alerian MLP Index on Tuesday.  The change was set to happen after the market closed Friday, and on Friday NRGY was up on big volume.  XTEX followed the same pattern, finishing second to last on the week after the announcement of its removal from the AMZI.  On the flipside, HEP didn’t see a huge bounce from the news that it would be included in the Alerian MLP Index after this Friday, but it was up 5.7% this week.
Year to Date Winners & Losers
Barring some really funky trading next week, Calumet Specialty Products (CLMT) will be the top performing traditionally structured (non-variable) MLP in 2012, following the trend mentioned above of refining strength.  OXF is by far the biggest loser of 2012, extending its lead with another big drop this week.  OXF is joined on the bottom 5 by two other coal MLPs (one of which cut its distribution in 2012: RNO).  Also in the bottom five are NRGY (which also had a distribution cut in 2012) and CMLP (which suffered from low natural gas, NGL prices, and low drilling activity in the Barnett Shale).

Top5Bottom5MLPs_12-21_YTD

News of the (MLP) World

News-of-the-World

With the MLP capital markets closed for the rest of the year, there were no debt or equity transactions.  There were many M&A announcements, growth project announcements and even a few corporate reorganizational announcements.  Typical year end clean up stuff for the most part.  Cheniere’s announced agreement with Total and the subsequent Bechtel contract announcement were more checkpoints on CQP’s very long LNG export development path.  ETE / ETP’s announced sale of the Southern Union utility assets for $1.035 billion was another checkpoint on that MLP family’s path towards digesting its huge M&A activity in 2011 and 2012.  Caiman provided more details on its Caiman Energy investment.

M&A / Growth Projects

  • Energy Transfer (ETE / ETP) announces sale of Southern Union utility assets to The Laclede Group for $1.035bn (press release)
  • Calumet Specialty Products (CLMT) announces acquisition of San Antonio, TX Refinery from NuStar Energy (NS) for $115mm (press release)
  • Cheniere Energy (CQP) announces 20-Year LNG sale and purchase agreement for LNG exports from Sabine Pass Liquefaction (press release)
    • Cheniere Energy (CQP) announces contract with Bechtel Group for a $3.8 billion project to build trains 3 and 4 of its proposed LNG facility at Sabine Pass
  • Natural Resource (NRP) announces acquisition of overriding royalty interests in the Marcellus Shale for $30.3mm (press release)
  • Susser Petroleum (SUSP) announces acquisition of 8 stores from Susser Holdings for $29mm (press release)
  • Ferrellgas (FGP) announces acquisition of IGS Propane, the propane division of Industrial Gas & Supply in CT for an undisclosed price
  • Williams Partners (WPZ) Caimain Energy update (press release)
    • WPZ owns 47.5% of Caiman Energy, which announced a $1.5bn joint venture to develop midstream infrastructure in the Utica
  • Vanguard Natural Resources update on Bakken acquisition
    • Update is someone exercised their option on the properties, so VNR will not be buying them for the previously announced $131mm

Corporate Announcements

  • Northern Tier (NTI) announces resignation of CEO Mario Rodriguez, Hank Huchta (President / COO) assumes CEO role (press release)
    • NTI reaffirms 4Q guidance
  • ONEOK Partners (OKS) announces corporate reorganization and new officers of the MLP (press release)
    • Robert Martinovich to move from CFO to COO of OKS
    • Derek Rainers to assume CFO role
    • John Gibson still CEO
RELATED CONTENT
No posts matching your criteria
MLPguy Post
Week Thoughts: Mariner Makes Midstream Mixed Midstream stocks were mixed across categories, with Canadian midstream outperformance offset by MLP weakness, but overall finished positive for the week, helped by broad market strength and income stock strength.
MLPguy Post
Week Thoughts: Midstream Captures More Downside The slow bleed in midstream continued this week. MLPs again lagged broader the Midstream Index (AMNA), because of Canadian midstream and a few large U.S. corporations. Higher commodity prices and strong broader equity market trading weren’t enough to get midstream moving higher...
MLPguy Post
Week Thoughts: Midstream Earnings Hit, Stocks Miss Midstream and MLPs were slight underperformers among energy stocks (XOP and XLE were largely flat) and underperformed general equities (as measured by S&P 500), which rallied 1.5%. Earnings, ex-dates for distributions and month-end strangeness whipped things around a bit in between a basically flat week.
MLPguy Post
Week Thoughts: MLPs Less Travelled Midstream basically kept pace with the broader market this week, while MLPs underperformed, again. Oil prices and broader equities were supportive, but that wasn’t enough to get MLPs moving ahead of EPD results Monday to kick off the meat of 3Q reporting season.
MLPguy Post
Week Thoughts: Midstream Inaction Quiet week in the stock market this week, which translated into a quiet week for midstream as well. The AMNA finished basically unchanged, while the MLP Index was slightly lower.
MLPguy Post
Week Thoughts: MLPs Brace for Earnings Midstream was negative across the board this week, and the MLP Index lost more ground to the other midstream indexes that include corporations. Lower oil prices, higher interest rates and general aversion to energy stocks were likely reasons for continued weakness for the sector.
MLPguy Post
Week Thoughts: Macro Noise Offsets MLP News After 5 straight negative days last week, midstream had three positive days this week, including an intra-day reversal Thursday and a positive Friday.
MLPguy Post
Status Update: Midstream Green in September Given the end of the month and quarter fell on a Monday, I wanted to get a quick post out with updated month and quarter end numbers. I hope you’ll understand if the upcoming weekly post is a bit shorter as a result.
MLPguy Post
Week Thoughts: MLPs Selloff On Purpose Risk was definitively off this week across energy stocks, commodities and the broader stock market. Naturally, utilities and REITs caught a bid, and midstream did not. Within midstream, Canada held up well and helped AMNA outperform the AMZ and AMUS.
MLPguy Post
Week Thoughts: Midstream Stocks Sustain September Surge Midstream stocks traded up amid a strong backdrop for energy stocks and for income stocks...
MLPguy Post
Week Thoughts: Scarcity Value Rally in MLPs Midstream stocks outpaced the S&P 500 and utilities this week in the face of falling oil prices and rising interest rates. MLPs were the best performers within midstream, benefitting from the “value rally”...
MLPguy Post
Week Thoughts: Market Advances, Midstream Unmoved It was a short, but steady week for midstream, helped by strong Canadian midstream performance that more than offset weakness from MLPs. Midstream stocks underperformed utilities and the S&P 500...
MLPguy Post
Week Thoughts: Takeout Bid Stops Midstream Bleeding Midstream broke out of its 6-week slump this week, helped by a private equity bid lobbed in Tuesday night, but also helped by risk-on broad market action and rebounding commodity prices.
MLPguy Post
Week Thoughts: Midstream Checked, Market Unbalanced Midstream stocks declined for a 6th straight week, this time joined by a pretty scary broad stock market decline on Friday. Broad market fear appears to be joining the energy sector antipathy and midstream apathy we’ve seen all summer.
MLPguy Post
Five Years Since Midstream Peak: Universe Update and In Memoriam The end of next week, the last trading day of August, will be the 5-year anniversary of the peak of the Alerian MLP Index.
MLPguy Post
Week Thoughts: Yield Inversion, Midstream Aversion Midstream stocks were down inline with broad equities this week, after a rally Friday that almost salvaged the week. It was a 4th straight negative week for midstream, and the MLP Index (on a price basis) now sits 11.3% lower than its high for the quarter reached in mid-July.
MLPguy Post
Week Thoughts: Un-Navigable Midstream Midstream and MLP stock performance accelerated to the downside this week, finishing with bigger losses this week than last week. It was also the 4th consecutive negative week for midstream, the longest such streak since late December.
MLPguy Post
Week Thoughts: Midstream De-Rated It was an inauspicious start to August for the stock market, for oil prices, and for the midstream sector due to the overriding influence of interest rates and tariff rates this week. MLPs had their second worst week of the year and worst week since early February.
MLPguy Post
Week Thoughts: Midstream Flagging into Earnings Barrage Midstream started the week strong Monday, but the bounce back was short-lived as midstream sold off each of the remaining days of the week, even as oil prices stabilized and the broad market rallied. Canada and a few larger corporations dragged down broader midstream indexes relative to the MLP Index, which continues to hold up well in a backdrop of upstream carnage.
MLPguy Post
Week Thoughts: Sweltering Energy Discontent Hits Midstream Midstream stocks, and MLPs in particular, held up ok this week, all things considered. This week saw a combination of negative macro forces converge to crush energy stocks more broadly.
MLPguy Post
Summer Cliff Notes: Answers to Common Questions on Midstream and MLPs I have recently been receiving a flurry of more basic questions from advisors who appear to be circling back to the midstream and MLP sector after a long layoff. The questions sometimes reflect implied misconceptions in the question itself, but also reflect how little time advisors care to spend to delve into the nuance of the midstream sector.
MLPguy Post
Week Thoughts: Uptrend is Midstream's Friend Midstream rode higher commodity prices and a record-setting broad equity market to another positive week. The steady grind higher for midstream continues. This was the 6th straight positive week for the MLP Index, which is up up 5.7% over those 6 weeks (WTI oil price is up 13.1% over that same time).
MLPguy Post
Week Thoughts: Midstream Floats Higher in Light Action On the week of America’s birthday, U.S. midstream (MLPs and corporations) outperformed Canadian ones, but the overall sector kept pace with a positive week for the S&P 500 and utilities. The AMNA crested 25% total return for 2019 so far and is off to a good start for the back half of the year.
MLPguy Post
Week Thoughts: Midstream Leads at Midpoint MLPs finished positive for the week, making it three straight positive weeks for MLPs to close out strong month of returns helped by a bounce back in oil prices and broad equity markets. Utilities were soft this week, and came in with first half returns below midstream and below the S&P 500, despite nearly 70 basis point reduction in the 10-year treasury interest rate.