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MLP investing


Hubris
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Although this is much more mainstream than when Lynch started doing it I think. I still thinks its relevant since PSX, VLO, MPC and other refiners might be moving to drop some of their midstream and downstream assets into similar structures.

 

I found a couple of presentations that seem to be a good introduction to the structures. I think the conglomerate nature of many energy assets might be tax inefficient and could have huge restructuring potential.

 

Panel_Presentation_Wed_Morning_Evolution_of_the_MLP.pdf

MLP_101.pdf

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Is it fair to say that Dividends, rather than Free Cash Flows are the relevant cash flows to discount in valuation? If this is the case, do you add Debt to the Market Cap to get EV or do you just compare it to price?

 

I always use free cash flow and some these MLPs have attractive reinvestment opportunities. So its combination of dividends and growth that you are getting out the best ones. You also have to factor in debt since for example PSXP has ample room to lever up and acquire more midstream assets from PSX.

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