In a reversal of the big trend in 2012 that saw MLP IPOs (on average) vastly outperform MLPs, this week we saw MLPs grind higher while each of the three MLP IPOs closed the week below their issue prices. This week’s 1.6% gain by the MLP Index was the lowest weekly return of the year so far, but even that “modest” rise for the MLP Index was enough to outperform other equities again.
Energy commodity prices were up sharply across the board, propane and natural gas leading the way on some very low temperatures (that I can attest to from my travels to Kansas City and Tulsa, where temps got down to the mid-teens). Distributions and earnings season is underway, expect related announcements to drive performance in the next few weeks absent some large macro event.
Winners & Losers
Small cap, high beta MLPs were the biggest winners again this week….
For the year, some of the biggest losers from last year are up the most for this year, led by OXF at +31.8% so far. The youngest MLP (SXCP) is also the biggest loser so far.
Everything is up, its been a very pleasant few weeks, which have some analysts (RW Baird MLP analyst Ethan Bellamy for example), calling for caution for MLPs moving forward as history has not been kind in the short term following periods of low volatility, or really any period that is not January. Also there are obviously still some issues to work out in Washington DC. Whether its another kick of the can down the road remains to be seen, but there will be drama and volatility, so get your popcorn and your war-chest ready.
News of the (MLP) World
This week was all about experiments in equity. A few times in 2012 and 2011 we saw two MLP IPOs price in a week, but never before have 3 MLP IPOs priced in a single week, until now. The experiment didn’t go so well, as all 3 of them broke issue, with SXCP (the last one of the week) dropping the most at -3.9%. In fact, of the last 10 MLP IPOs, 5 have broken issue, so there is clearly still some fatigue left over from late last year. Second experiment was for a variable distribution MLP to execute a public registered offering. It was not a primary offering, but it was still a first.
M&A / Growth Projects