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 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.
