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.
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.”
September 25, 2016
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MLPs snapped back hard with their best week since April, up 4.5% over last week. Large cap MLPs outperformed smaller MLPs (EPD’s big week helped AMZ outperform the equal weight version by 50 bps). Wednesday’s confirmation of 3 more months of current rates from the Fed spurred risk assets higher, especially those that offer income (UTY +3.4%, S&P 500 +1.2%). The strong week pushed MLPs back into positive territory for the month to date, just barely.
Oil was along for the risk-on ride most of the week, helped by another strong inventory report and jawboning by OPEC energy ministers ahead of an informal meeting of OPEC next week in Algiers. That worked until around noon Friday when reports broke that Saudi Arabia confirmed that the meeting was in fact informal and no freeze decision was likely.
The lack of action spurred MLPs higher this week: no FED action, no MLP equity offerings, bullish sentiment into an OPEC meeting that will result in no action.
Poll Questions: Theme-Spotting
Like the Fed, MLPs investors are on the lookout for “further evidence of continued progress toward objectives…” At various times since the bottom in February, positive themes have emerged (ethane, M&A, self help from asset sales or cost cutting). The negative themes seem to have faded or become less urgent (maybe with the exception of read-throughs from the DAPL debacle).
In this week’s poll questions, we focus on what potential negative trends could emerge at this point, and how worried you are about them.
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Sorry, there are no polls available at the moment.
Winners & Losers
PAA and HEP led a tight grouping of MLPs that traded up 8% or better this week. PAA seems to be gathering momentum on the back of oil price strength, Permian volume optimism and the approaching simplification deal close. HEP’s drop down of contracted refinery assets with PIPE financing pre-sold was very well received.
Not pictured is EPD (+4.9%), which had underperformed pretty dramatically since the WMB bid rumors began circulating, but bounced back this week. Also, SXL (+5.3%) and ETP (+3.9%) both bounced back a bit, but didn’t regain all that was lost over the last few weeks from the Bakken Pipeline delay.
Year to Date Leaderboard
Each of the top 5 and bottom 5 on the year to date leaderboard traded up this week, except RRMS and SUN. The drop down, high growth MLPs that occupy 3 of the 5 bottom spots perked up a bit, in particular on Friday when the sector overall was down.
General Partner Holding Companies
General partners traded well, although with the typical wide range of returns. PAGP led the way, up nearly 10%, basically in lockstep with PAA. Another oil beta stock, SEMG, however, took the bottom spot.
News of the (MLP) World
It didn’t feel like much company-specific news happened this week but tallying up all the news, it turns out there was quite a bit of news activity this week. Two companies that were filed as MLP IPOs last year have refiled as corporations this year. A yieldco did an equity deal, $2.5bn worth of midstream high yield debt priced, we got a PIPE to fund a drop down, and an MLP investor was charged with insider trading. No telling what we’ll get next week, especially with all the OPEC nonsense that’s likely to go down.
Financing
Growth Projects / M&A
Other