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January 20, 2012

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Winners and Losers: MLPs Shake off Leaking Natural Gas

The Alerian MLP Index reversed course this week, and is now riding a 5 day winning streak after going up 3 days, then down 5 days to start the year.  MLPs traded inline with the S&P 500 this week, which was also up each day this week, and closed up 2.0% week over week.

Variable distribution MLPs were the big winners again (for me that group is TNH, RNF, UAN and DMLP), as each of the fertilizer MLPs was up big this week.  UAN led the group, up 6.3% on the week, likely getting a lift from the news around Carl Icahn’s investment in UAN’s public general partner CVR Energy Inc.  Also, natural gas prices dropping is a positive for the fertilizer MLPs, and drop they did this week, another 10%.
GPs lagged, dragged down by Atlas Energy ($ATLS), which dropped 8.0% this week.  ATLS was down more than 6% intra-day on Friday on heavy volume, before recovering to close down just 1.3% on the day.  Atlas has substantial upstream operations in the Marcellus in addition to its ownership in APL, causing it to have outsized leverage to lower natural gas prices.  Not including ATLS, that group was up 2.7%.

Despite announcing earnings that disappointed a few analysts, and announcing flat distribution quarter over quarter (below everyone’s expectations), KMP had a solid week, up 4.4%, and landing it in the top 5 for the week for the first time in a few months. Management did affirm 2012 distribution and distributable cash flow guidance.  The losers this week were commodity sensitive names or MLPs that are otherwise negatively affected by declining natural gas prices.

 This week was an extension of trends we’ve seen all year, and discussed above.

Propane MLPs are battling it out for the biggest MLP loser so far this year.  On the positive side, MLPs that did poorly last year (except for propane MLPs of course), are up the most as they catch up to the rest of the MLPs.

More to come later this weekend in my Week Thoughts post.

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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