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SHORT BreitBurn Energy Partners (BBEP)

SHORT Pacific Coast Oil Trust (ROYT)

CALL TODAY AT 1PM EST to discuss our theses on these two names.

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  • Conference Code: 973882#
  • Materials: CLICK HERE (slides will download prior to the start of the call, email if issue)
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We believe the high-yield energy equity space to be rich hunting grounds for short/sell ideas. 

The performance of Master Limited Partnerships (MLP) is particularly representative of the 2009 - 1H13 yield chase.

But behind the guise of what are commonly pitched to retail investors as low risk, high yield fixed-income alternatives, we are finding many instances of aggressive and irregular accounting (in most cases, non-GAAP measures and other “management metrics”), poor corporate governance, and grossly overvalued securities.  Many of these companies trade at ~30 - 50x earnings with low organic growth prospects, have low-to-negative FCF yields, and pay dividends/distributions well in excess of earnings or free cash flow. 

Our recent work on the short sides of LINN Energy (LINE, LNCO) and EV Energy Partners (EVEP) has provided a solid base to work from - we know what to look for. 

This report focuses on two high-yield energy short ideas: BreitBurn Energy Partners (BBEP) - an upstream MLP - and Pacific Coast Oil Trust (ROYT) - a BreitBurn-affiliated trust that is trading at 2x our 3P NAV.

Kevin Kaiser

Senior Analyst