The MLP Heyday is Over, Good Riddance To It

10/27/17 08:06AM EDT

Editor's Note: Below is a brief excerpt from today's Early Look written by Energy analyst Kevin Kaiser. Click here to learn more about the Early Look. 

The MLP Heyday is Over, Good Riddance To It - mlp1

The benchmark Alerian MLP Index is down 6% in October alone and is near its lowest level since the energy panic of 1Q 2016.

Investors are starting to see MLPs for what they really are: capital-intensive businesses with mediocre returns on capital operating in a highly-competitive and cyclical industry, with low free cash flow generation, high debt leverage, and, in many cases, atrocious corporate governance.  That’s not a business that should trade at 30x earnings.  MLPs aren’t special.


The MLP Heyday is Over, Good Riddance To It - early look

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.