Who is Going to Rescue the MLP’s Today?

October 9, 2014  12:35 pm

The Fed won’t be rescuing the MLP’s today.

A battering like we have never seen is taking place in the MLP space as crude oil took another tumble (down $1-$2/barrel) this morning.  In spite of virtually all of the energy MLP’s being hedged (meaning most distribution cuts won’t occur for many months–or longer) there is an obvious fear.  Bargains are being created as 60% of the issues are off 3% or more–and many issues are off 5, 7 and even 9%.

We are certainly standing aside of looking for more bargains in this sector–we will let the dust clear before even remotely considering purchases.  If the Saudi’s keep ramping up production while our inventories build (up 5 million barrels this week) we may have a bunch more pain ahead and there will be plenty of time to consider bargains in the months ahead.  Watch $80-$82/barrell on West Texas–just a few dollars lower than we are at today.  We dould see some drilling activity start to wane at this point and this would be a disaster for the U.S. economy.

You can see the bargains in our MLP list (by yield) here.