This week, MLPs again outperformed in a down week for the market and oil prices, and again it can largely be attributed to investors who would rather not sell when a distribution is set to be paid in a week or two. Some of that technical strength should go away starting next week, and MLPs will probably under-perform in the next few weeks, as is typical.
The S&P 500 was down 1.5% this week, but is still up 14.3% for the year including dividends. Natural gas futures were down 6.3% for the week, oil futures were down 4.8%. Both are likely to suffer a bit in terms of demand if this hurricane in the northeast shuts things down there for a few days, which I guess contributed to some of the weakness this week. Also of note on the commodity front, propane prices edged above $1.00 per gallon for the first time since early May, just in time for Winter weather.
13 MLPs with earnings next week, including big boys EPD (11/1), WPZ (10/31), OKS (10/31), but will be interesting to see how HEP, CLMT earnings came in to get a further read on refined products and refinery results.
Winners & Losers
The clear big winner this week was MPLX, obviously, which got the best of both worlds: a record low IPO yield of 4.77% and the highest first trading day pop since 2007 at 23.6%. LGP, the forgotten other IPO of the week, priced on Wednesday (a little less aggressively at the midpoint of its range for an 8.75% yield) and was up 4.2% this week. SMLP was up on all the research analyst initiation pieces, which were positive. OXF and RNO were up along with most other coal stocks after Peabody reported promising results Monday.
On the losing side of the trades this week, QRE and CMLP were down after their ex-dates this week, but probably not helped by weaker oil and gas prices. NS didn’t give the market much in the way of exciting news in its earnings release, weaker than expected DCF, 0.7x distribution coverage and lowered 2013 expectations.
For the year, CMLP takes over the bottom spot in the sector at -21.7%, even with the distribution this week. ARLP broke out of the bottom 5 (replaced by NRGY) on solid earnings and hopeful coal prospects all around this week. TLLP crept into the top five with its 40% total return this year, and now all of the top 5 are up 40%+.
News of the (MLP) World
Equity – All about the IPOs
Stay tuned for an updated review of the IPO market…