Valuentum Exclusive Analysis for the Discerning Investor

In The News: APU, EPD, MMP, OHI, PSA, O, TGE
We’re keeping a close eye on a number of high-yielding equities, and several have reported strong earnings during the calendar second quarter.

Aug 24, 2018

The Days of the MLP Model Are Numbered
We applaud Enbridge-Spectra on explaining the MLP business model with transparency. Though we think rollups could bring new capital into the MLP space, we expect the days of the MLP model are numbered. The opportunity to raise capital at yield-based pricing has been eliminated.

Aug 20, 2018

ETE-ETP Rollup and Implied Distribution Cut
We continue to believe that the MLP business model may be a goner, and the recent ETE-ETP rollup is the latest example. Though new capital may come into the space on expectations that there will be premiums in unit-for-unit rollup deals, most of the combinations are coming with implied distribution cuts.

Aug 17, 2018

ICYMI -- Podcast: 2nd Annual Nelson Exclusive Yearly Round Up Call
President of Investment Research at Valuentum Brian Nelson talks the markets, valuations, the economy, the consumer and various other trends from crude oil to cryptocurrency to geopolitical risks to corporate tax reform and beyond. Running time ~25 minutes.

Jul 24, 2018

FERC Clarifies MLP Tax Changes
Image shown: The prices of MLPs have collapsed since mid-June 2015 as the stock market has surged. The status quo for many MLPs looks to be restored, though that doesn’t mean MLPs are out of the woods. We continue to expect many to transition to corporates in coming years, and the idea of consolidation/buyouts may bring new investor capital to the space.

Jun 29, 2018

Dividend Growth Still A Resilient Theme
Rising interest rates may pose headwinds to yield-sensitive dividend payers, but we think dividend growth investing remains a resilient theme. We’re big fans of the concept of yield-on-cost, but close attention to valuations, free cash flow generation and balance-sheet health will remain critical.

Jun 1, 2018

The Free Cash Flow Shortfall in the Master Limited Partnership Space
With the recent acceleration of master limited partnership simplification transactions, we find it appropriate to revisit the internally-generated cash flow shortfall present throughout much of the space. The table provides a breakdown of traditional free cash flow (cash from operating activities less all capital spending) relative to distributions paid, as well as a measure of the elevated financial leverage often found within the group.

May 17, 2018

Master Limited Partnership Simplifications on the Rise
With the announcement of three separate master limited partnership simplification transactions on May 17 alone, we must revisit our thesis that the business structure may not be in it for the long haul.

Apr 26, 2018

What’s Working (or NOT Working) in Today’s Market?
Image shown: Crude oil continues to lead gainers while consumer staples, REITs, and energy MLPs continue to get shellacked. Let’s take a look at what’s been working and what’s not been working in the market thus far in 2018. To little surprise, in our opinion, commodity prices have been the leaders, while interest-rate sensitive equities have been the laggards. We’ve been expecting this.

Apr 18, 2018

Kinder Morgan Back on Track But We're Watching Financial Statements Closely
Kinder Morgan says it is paying dividends out of internal free cash flow generation, which should remove capital-market dependency risk. Shares look attractive in the mid-teens, though we’re not in any hurry to add them to either newsletter. We’ll be watching its financial statements closely through the course of the year.

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Valuentum Exclusive Analysis for the Discerning Investor