Refiners Shine in Ugly Year for MLPs
Two thousand fifteen is mercifully in the books. The year saw the Alerian MLP Index, a composite of the 50 largest energy MLPs, drop 32.6% — its second worst annual performance on record. Among the 128 MLPs in my MLP database, the average return for those in business during all of 2015 was -29.7%.
Nevertheless, there were winners in the space. Here are 2015’s best performing MLPs, ranked in descending order of total return last year:
- 2015 Return = Total 2015 unit price return including dividends
- EV = Enterprise value in millions as of Jan. 4, 2016
- EBITDA = Earnings before interest, tax, depreciation and amortization for the trailing 12 months (TTM), in millions
- Debt/EBITDA = Net debt at the end of the most recently reported fiscal quarter divided by TTM EBITDA
- FCF = Levered free cash flow for TTM in millions
- Yield = Annualized yield based on the most recent quarter’s distribution
Alon USA Partners (NYSE: ALDW) was the runaway winner. No other MLP came close, but the next two strongest performers also happened to be fuel refiners. In fourth place was Star Gas Partners (NYSE: SGU), a home heating oil distributor and services provider. Coming in fifth was the amusement parks operator Cedar Fair (NYSE: FUN), which was added to the MLP Profits Aggressive Portfolio in January 2015.
The list of losers was much longer. Here are the 10 worst-performing MLPs of 2015, all of which are either involved in oil and gas production, or in mining the sand used in hydraulic fracturing:
I omitted the yields from this table because they were either zero because the partnership has cut the distribution, or astronomical (in some cases above 100%) because the partnership hasn’t yet announced an expected distribution cut.
Lest you be tempted into bottom fishing too early, note that the worst overall performer, New Source Energy Partners (OTC: NSLP) is actually making its second straight appearance in the bottom 10, after ranking as the 5th worst performer last year. Also appearing in the bottom 10 for the second straight year were Mid-Con Energy Partners (NASDAQ: MCEP), Legacy Reserves (NASDAQ: LGCY), and Linn Energy (NASDAQ: LINE).
The dust is far from settled in the energy sector, but there should be some clear winners following the recent passage of the federal spending bill. Join us at MLP Profits this year as we identify the partnerships that are poised to thrive — as well as those to avoid in 2016.