The National Association of Publicly Traded Partnerships will host the 2008 MLP Investor Conference in New York on May 21st and 22nd. The event will be held at the Crowne Plaza Hotel in Times Square, and will include sponsors such as Raymond James & Associates. Additional information can be found at the NAPTP website here.
Targa Resources Partners, LP (NASDAQ: NGLS) has been added to the Alerian MLP Select Index as of September 20th. Targa provides midstream gas and natural gas liquids (NGL) services including gas compression, treatment, processing as well as NGL fractionation.
Targa Resources, Inc. (37% owner of Targa Resources Partners, LP) was founded in 2004 with the help of Warburg Pincus. Warburg Pincus retains 74% ownership of Targa Resources, Inc., with the balance of ownership held by Merrill Lynch and the Targa management team.
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MLP bellwether Kinder Morgan presents at the 2007 CEO Energy Conference in New York today. You can download the KMP presentation here. Of note is the diagram of capital structure (slide 4) which helps clarify how a portion of LP units are accumulated by the General Partner (GP) as incentive.
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Benchmarks have always been an important part of investing. In general, most investors compare the performance of their stock portfolio against the S&P 500 (an index comprised of some of the largest US corporations). However, until recently a universal index for benchmarking Master Limited Partnerships (MLPs) was hard to come by. After some research, I was able to find an index which is considered the de facto standard for benchmarking MLPs: the Alerian MLP Index. The ticker is AMZX, and the performance of the index has a lot to say about the kind of returns MLPs can deliver.
According to data from Alerian Capital Management, the AMZX index has outperformed the S&P 500 over 1, 3, 5, and 10 year intervals. In fact, the AMZX index has a Compound Annual Growth Rate (CAGR) of about 18%, compared to around 6% for the S&P 500!
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Bear Stearns is now offering Exchange Traded Notes (ETNs) that are tied to the Alerian MLP Select Index. Per Alerian, the notes are the first of their kind, and allow investors to diversify risk across energy MLPs while owning only one security. ETN holders are entitled to the equivalent cash distributions (paid monthly) of the underlying MLPs in the index.
However, the distributions are considered ordinary income. That is, they are taxed like dividends. In contrast, investors who invest directly in MLPs are allowed to defer taxes on cash distributions until they sell their MLP units.
The downside to these deferrals is the paperwork involved, as owners of MLPs can be required to file tax forms in every state where the entity does business. Owning an ETN eliminates this problem, as investors simply fill out a 1099 as with other investments.
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