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January 7, 2012

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MLP Winners and Losers: Strength in Fertilizer and Small Cap MLPs

Starting this week, I’ll be breaking up my weekly post into 2 posts: Winners and Losers and Week Thoughts.  Also, I won’t be wrapping up the news of the week in the MLP space anymore, it just seems like a waste of time.  If there is an important news item that warrants comment, I’ll comment on it, but I don’t think you are coming here for an inclusive list of what happened in the MLP space.  Each week, the goal will be to come out with this recap of winners and losers on Friday, then publish Week Thoughts on Saturday or Sunday.  If everyone hates that format, let me know, but the weekly posts were getting unwieldy and it seems like breaking them up will allow me to highlight certain information better.
Winners and Losers
The theme this week was small cap MLPs that were beaten down in 2011.  With the exception of ARLP, each of the other 4 best performing MLPs this week were down more than 20% last year.  This bounce back for high beta 2011 losers, appears to be a result of investors buying any MLPs that haven’t yet participated in the nearly 20% sector-wide rally off the October 4th lows.  Most of the top five this week are not in the Alerian MLP Index, hence the wide disparity between the winners and the index (which tracks the 50 largest MLPs).

On the downside, there appears to have been profit taking or rotation out of some of the highest flying MLPs of the last 3 months.  OILT was up 22.7% from October 4th through year end, SXL was up 36.7% during that time, and KMP was up 27.1%.  The other two losers (APU and FGP) are propane MLPs that have continued to languish as weather in the fourth quarter was milder than normal, likely leading to lower demand for propane.

Other Notes:

  • MLP general partner holding companies had a solid week, with average returns of 2.8%, helped by ATLS gaining 10.5%
  • Variable distribution MLPs, particularly fertilizer MLPs, had a great week:
    • RNF up 18.5%
    • UAN up 11.3%
    • TNH up 8.8%

Disclosure: The information in this article is not meant to be financial advice, we are not your financial advisor and I am posting my comments for informational purposes only. 

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