Market data:

Update on Master Limited Partnerships

On April 12, 2012, I was on a conference call with Swank Capital for an update on the Cushing 30 MLP Index. The following are a few highlights

  • MLP as an asset class as of 3/31/2012 has a market cap of approximately $350 Billions
  • An additional $250 billions may be needed to build infrastructures by 2035
  • Based on the Cushing 30 Index the spread between MLPs and 10 year US Treasury is at 420 basis points; a spread over 400 points historically has forecast a very positive 12 month forward return for he sector. I calculate the spread using the Alerion Index and we are not quite at 400 bips but close enough (373)
  • While Nat gas prices remain nvery low, spreads and margins continue to be attractive for MLPs that process and transport Natural Gas Liquids
  • Domestic onshore Crude Oil development possible new area of expansion for E&P companies
  • Growing supply of shale gas and declining supply of conventional resources are changing the pipeline blueprint
  • MLP Subsectors Nat Gas, Propane and Coal continue to underperform while Shipping ad Transportation continue to outperform. Significant dispersion of returns among the subsectors is expected to continue
  • M&A trend should continue