MLPs Back in Black After Red-Hot April
April is in the books, and it was a month to remember. The 11% gain in April was the 5th best monthly advance ever for the Alerian MLP Index (AMZ), and it tied the best April on record. After falling sharply in the first quarter, the AMZ has now risen by 38% since its February lows, and is in positive territory for the year for the first time in months.
Underlying fundamentals remain strong as well. Through last week 86 MLPs had announced first quarter distributions, but only 13 decreased their payouts. These were mostly upstream or downstream partnerships. On the other hand 32 MLPs raised distributions from the previous quarter, including the double-digit percentage increases at Tallgrass Energy Partners (NYSE: TEP), Tallgrass Energy GP (NYSE: TEGP) and Viper Energy Partners (NASDAQ: VNOM).
The top performer year-to-date is beleaguered oil producer Mid-Con Energy Partners (NASDAQ: MCEP). It is up over 200% in 2016, but it had fallen so far that it is still down 45% over the past 12 months. SunCoke Energy Partners (NYSE: SXCP) was far back in second place with a year-to-date gain of 73%, but it is also down year-over-year (-37%).
The rally in April was broad-based. Of the 125 MLPs currently in my database, 103 had a positive return in April, and 65 had gains of at least 10%. Another beaten-down oil producer, Legacy Reserves (NASDAQ: LGCY) soared by an astounding 218% for the month. But investor beware: it is down by more than 20% over the past week.
Here are April’s top 10 performers:
- EV – Enterprise Value in billions of U.S. dollars as of May 2
- 1-Year Return – Total shareholder return (TSR), including dividends, for the past 12 months
April’s top performers come from many corners of the MLP space, but they do have one thing in common. Every one of them still has a negative total return for the past year, and 9 of 10 still have losses of more than 40% over that span despite the April surge.
Our advice is not to chase the surge without doing plenty of due diligence. You can start by joining us at MLP Profits, where you can read why one of April’s top 10 performers is currently our #1 Best Buy.