MLPs continued their up trend since November 15th, when the post-election fear crested, with a +0.8% week, slightly better than the S&P 500’s +0.6% return for the week. Natural gas and NGLs dropped this week, with Ethane hitting its lowest price since 2002 on Wednesday. But oil was up and so were stocks, with firmness of both contributing to MLP strength. Also important to MLP strength this week was a lack of equity issuance. With MLP equity supply stagnant for the first time in a few months, that usual selling pressure wasn’t there.
Heading into the final month of 2012, MLPs are up 2.0% for the year, or 8.2% including distributions, compared with 15% total return for the S&P 500. Expect the market to stay focused on the negotiations in Washington the next 4 weeks in a replay of the debt ceiling debates from last year. House Speaker John Boehner played the role of the Groundhog this week when on Wednesday he didn’t see his shadow, then on Thursday he did see his shadow (more pessimistic comments). The market appeared to react both times.
Whoever takes up the role of the Groundhog next week (Obama?), the financial media and we will be there watching to hang on their words and speculate on their meaning (like we do whenever the Federal Reserve chairman). So, the market will probably continue to be held hostage by repetitive back and forth between the President and various republican members of congress. It feels like every day is Groundhog Day, what a concept, if only someone had thought to put Groundhog Day and repetition of really annoying days together…oh wait:
Random notes and charts now that another quarter is in the books for the Alerian MLP Index:
Winners & Losers
Memorial Production (MEMP) was up 7.4% despite natural gas dropping sharply week over week. Drop down MLPs dominate the rest of the top 5, with the exception of NS, which was up after its conference call Thursday when management provided an update on its capital budget and financing plan, which called for junior subordinated notes rather than equity offerings through 2014. On the downside, OXF went from first last week to the more familiar worst spot this week, dropping 9.9%. RNO likewise went from top 5 to bottom 5 this week, down 4.6%. Not much notable news this week, so most of the action was just beta to the MLP Indexes, to the market, and to commodity prices (natural gas for coal MLPs).
As has been the case several times this year, the bottom 5 year to date are dominated by coal MLPs, with CMLP along for the ride on lower drilling activity on its system due to low natural gas prices. Nothing much has changed amongst the top five week over week.
News of the (MLP) World
Light news week. Lots of MLPs will be in New York at the Wells Fargo MLP conference this week so there will be lots of MLP presentations posted to the IR sections of MLP websites.
M&A / GROWTH PROJECTS
That’s all for this weekend, have a good week everyone…