Portfolio Action Summary:

• Legacy Reserves (Nasdaq: LGCY) downgraded to Sell
• Genesis Energy (NYSE: GEL) downgraded to Hold
• Energy Transfer Equity (NYSE: ETE) buy target raised to $52 from $46 (see Best Buys)
• EnLink Midstream (NYSE: ENLC) buy target raised to $40 from $37 (see Best Buys)
• Enterprise Products Partners (NYSE: EPD) buy target raised to $75 from $66 (see Best Buys)
• EQT Midstream (NYSE: EQM) buy target raised to $70 from $51 (see Best Buys)
• Magellan Midstream Partners (NYSE: MMP) buy target raised to $77 from $70 (see Best Buys)
• Oaktree Capital Group (NYSE: OAK) buy target lowered to $52 from $56
• Sunoco Logistics (NYSE: SXL) buy target raised to $91 from $67 (see Best Buys)
• Targa Resources (NYSE: TRGP) buy target raised to $105 from $85 (see Best Buys)
• Williams (NYSE: WMB) buy target raised to $46 from $39 (see Best Buys)

Amerigas Partners (NYSE: APU) reported strong quarterly results on Feb. 4, with adjusted earnings before items up 19 percent from a year ago and margins up slightly from the same period in 2013 despite a 35 percent rise in wholesale propane prices.

The leading propane distributor and recent Growth portfolio addition stuck to the prior guidance of growing adjusted earnings 7 percent for the year, a goal that now looks too conservative.

The unit price has slipped 2 percent since the report, but management is voting with its wallets. A director spent more than $100,00 to purchase units on Feb. 6, followed by the CEO and the CFO with purchases of nearly $500,000 and $127,000, respectively, on Feb. 12. We share their optimism about this steady 8-percent yielder, having just designated it one of the nine best buys across our portfolios. Buy APU below $51  

Atlas Resource Partners (NYSE ARP) delivered upbeat quarterly results on Feb. 27, declaring a 21 percent year-over-year increase in the first-quarter distribution that slightly outpaced distributable cash flow. Adjusting for the effects of adverse weather that curtailed production, the coverage ratio would have improved to 1.05.

Management stood by its prior forecast for distribution growth of approximately 20 percent for the entire year and the partnership shifted to a monthly distribution schedule. Drilling results continue to exceed expectations, notably in the Mississippi Lime play.

Management did note that first-quarter distributions would remain similar to those just declared before taking into consideration the effect of winter storms, then ramp up later in the year as new wells are connected. But that cautionary note didn’t prevent the unit price from rising 4 percent over the two days following the report, gains it has largely held despite a subsequent 5.5 million unit secondary offering to finance the recent acquisition of coalbed methane  gas wells.

Hedge fund titan Leon Cooperman has continued to accumulate ARP units, investing more than $1.2 million in market purchases on Feb. 19 on the heels of his $9 million shopping spree in November.  With a double-digit yield and rapid distribution growth, Atlas Resource remains our favorite upstream MLP as well. Buy ARP below $23.

Buckeye Partners (NYSE: BPL) reported an 8 percent increase in adjusted earbnings from continuing operations on Feb. 7, and announced a distribution increase of 4.8 percent year-over-year, though the timing of equity offering to pay for recent acquisitions left the quarterly coverage ratio at 0.94x and the annual one a 0.99.

Business fundamentals for the refined products distributor and crude logistics player remained solid with pipeline volumes up 6 percent and terminal throughput 7 percent year-over-year. Management also unveiled plans to dispose underperforming gas storage assets, and said that based on the strong start to 2014 the pace of distribution increases could accelerate as the year progresses.

On Feb. 11 Citigroup upgraded BPL to a Buy from Neutral. The unit price is up 4 percent since the report, for a current yield of 5.9 percent. Buy BPL on dips below $70.

Crestwood Midstream Partners (NYSE: CMLP) reported upbeat operating results on Feb. 26, as strong Marcellus gathering volumes and increased demand for storage, transportation and NGL services associated with the cold weather offset a weather-related slowdown in the Bakken.  The quarterly distribution rose by the now-predictable half-cent per unit for a 7.2 percent current yield, though distributable cash flow covered only 89 percent of the payout. Crestwood expects the coverahr to improve to 1x for 2014 as it gains the full benefit of the recently acquired Bakken gathering system, which now allows it to handle 18 percent of the prolific crude shale play’s output. Antero Resources’ (NYSE: AR) aggressive Marcellus drilling program should keep gathering volumes there growing fast as well. Crestwood is forecasting distribution growth of 6 to 10 percent in 2014 and beyond, a step up from the recent 5 percent. The unit price has consolidated at the flat 200-day moving average since the report, roughly half way between the December lows and the vicinity of $25 at the start of the year. There’s upside here if Crestwood can deliver on its promises, as reflected in the upgraded $31 price target recently set at Landenburg Thalmann. Buy CMLP below $25.

CVR Refining (NYSE: CVRR) reported revenue upside and record quarterly crude throughput on Feb. 20, resulting in the distribution of 45 cents per unit for the variable distribution refining MLP controlled by Carl Icahn.  The payout brought distributions for the year to $3.68 per unit, and $3.86 adjusting for the three weeks in early 2013 before the initial public offering. Matching that this year would require a significant widening in crude spreads that have compressed considerably of late. But even in the muted current conditions CVRR’s two refineries remain efficient, solidly profitable and quite cheap, with little debt and an enterprise value of just 4.7 times 2013 EBITDA. The unit price was weak following the report but has rebounded 12 percent since March 4, aided by a favorable mention as an inexpensive income play in the most recent Barron’s. We remain down 10 percent since August but confident about the long-term proposition. Buy CVRR below $26.

DCP Midstream Partners (NYSE: DPM) reported an acquisition-adjusted 6 percent bump in fourth-quarter EBITDA on Feb. 26, and boosted the distribution 5.8 percent year-over-year, the annual 6 percent increase matching the low end of its guidance.

The partnership is targeting distribution growth of 7 percent in 2014, supported by the newly announced $1.15 billion dropdown from its general partner that includes a one-third interest in two NGL pipelines connecting the Eagle Ford and the Bakken to fractionators on the Gulf Coast, the remaining 20 percent of the Eagle Ford gas processing system that keyed last year’s growth and a gas processing plant in the Rockies that will soon be joined by the second one DPM has under construction.

The dropdown will be immediately accretive, costing DPM 12 times earnings (below its own valuation) and as little as 7 times in a few years as the NGL pipeline traffic ramps up. The general partner agreed to take 20 percent of the purchase price in DPM units, and the partnership will likely use the proceeds from the recent 12.5 million unit offering to cover more of the tab, along with the $725 million bond sale priced on March 10.

The Eagle Ford and Niobrara basins should provide much organic growth in gas processing in the years ahead, and most of the dropped down assets are covered by long-term fee-based contracts.

The unit price has now marked time for seven months and may continue to do so amid questions about the ultimate fate of the parent joint venture between Spectra Energy (NYSE: SE)  and Phillips 66 (NYSE: PSX).  Buy DPM below $51.

Energy Transfer Equity (NYSE: ETE) reported fourth-quarter revenue well above estimates on a consolidated basis on Feb. 19, even as distributable cash flow attributable to ETE partners declined as a result of the transfer of Southern Union assets to the Energy Transfer Partners (NYSE: ETP) affiliate in April. ETE distributions however, have continued to rise, the latest representing a 3 percent current yield, 9 percent year-over-year growth and a 0.95x coverage ratio.

The coverage should improve in 2014 thanks to projected EBITDA growth of roughly 11 percent before any further lucrative acquisitions by affiliates, the recently announced $1 billion buyback and proceeds from the initial public offering in the fall of the subsidiary LNG assets MLP.

The rich and secure cash flows expected from the Lake Charles LNG export project continued to drive  the unit price to a gain of more than 10 percent since the beginning of February (and 30 percent since the financial details of the LNG project were revealed in late November.)

This month’s Best Buys feature has more on why this is a must-own core MLP holding. Buy ETE below the increased maximum of $52.                      

Energy Transfer Partners (NYSE: ETP) continued to material underperform its general partner, trading flat since the start of February and still down 3 percent on the year.

Improved revenue from NGL transportation boosted distributable cash flow for the year enough that ETP was able to fully cover its second straight declared distribution increase, representing a 3 percent increase year-over-year and providing a current yield of 6.7 percent. ETP has forecast distribution growth of approximately 6 percent this year, and will receive an additional $150 million from ETE above previously negotiated fees for work  on the LNG project.

In other news, the partnership is now soliciting commitments for pipeline transport of crude from the Bakken to the terminal on the Texas coast operated by affiliate Sunoco Logistics (NYSE: SXL). The route would likely seek to take advantage of the underutilized Trunkline system that used to deliver Gulf Coast gas to the Midwest. But other pipeline shippers have recently been forced to shelve similar projects as drillers continue to prefer the flexibility of rail shipments.

The partnership was also recently awarded $319 million by a Dallas jury that agreed with its claim that Enterprise Products Partners (NYSE: EPD) wrongfully reneged on using ETP as its partner in the southern leg of the Keystone XL Partner. Enterprise, which ultimately partnered with Enbridge (NYSE: EN) on the project, has vowed to appeal. The sum, even if it is doubled by a disgorgement ruling, is unlikely to be meaningful in the long run to either partnership. But the case underscores a growing rivalry between Dallas-based ETP and Houston’s EPD, which once were allies.

ETP’s fortunes are more likely to hinge on progress of its expanding  NGL and midstream  segments and the degree to which it manages to arrest the slide in revenue for the transportation of natural gas, as well as the timing of ETE’s likely plans to buy out the rest of ETP’s share of the general partnership interest in Sunoco Logistics. The modest valuation and relatively generous yield are promising markers for the future. Buy ETP below $55.

EnLink Midstream (NYSE: ENLC) is the new name for the successor to Crosstex Energy (NYSE: XTXI) following the merger of the affiliated MLP with the midstream assets of Devon Energy (NYSE: DVN), which closed on March 7. Each XTXI share was exchanged for one of ENLC, along, along with a one-time cash payment of approximately $2.05 per share.

ENLK and ENLC will each own 50 percent of the operating affiliate’s assets, though as the general partner ENLC will also enjoy generous incentive distribution rights and should as a result deliver faster growth. The company, headed by Crosstex chief Barry E. Davis, has forecast dividends of 80 cents a share this year, representing a 63 percent increase from XTXI’s payout in 2013, for a prospective yield of 2.2 percent.

The midstream operation ENLC will oversee now boasts 7,300 miles of gathering and transportation pipelines, 12 gas processing plants and six fractionators along with logistics assets. It also has a presence in such key shale basins as the Eagle Ford, the Permian and the Marcellus, as well as a built-in growth platform as sponsor Devon expands its crude output.

Furthermore, low financial leverage should permit accretive acquisitions and cost-efficient investment in organic growth.  Robert W. Baird upgraded ENLC to Outperform from Neutral on March 10, citing many of the same factors as well as estimated 39 percent annual dividend growth over the next three years.

The trading action over the last six weeks has been eventful, running the share price up 17 percent toward the end of last month before revoking almost the entire gains, perhaps in part due to the realization that ENLC no longer qualifies for inclusion in the Russell 2000 small-cap index. We’re content with our 24 percent return on this Dec. 4 pick (including the cash payment) and excited about the growth opportunities ahead. Buy ENLC below $40.

Enterprise Products Partners (NYSE: EPD) reported typically strong results on Jan. 30, as booming profits from NGL shipment and processing more than made up for the decline in natural gas transport revenue.

Quarterly distributable cash flow  rose 15 percent year-over-year to more than $1 billion, with pipelines other than gas ones transporting 16 percent more product and new Gulf Coast fractionators processed more NGLs into propane and butane. Crude pipeline systems in south and west Texas, along with the Seaway and the Eagle Ford joint venture pipelines, were another growth driver.

True to its financial conservatism, Enterprise set aside $382 million of that $1 billion in distributable cash flow to finance organic growth projects, notably in additional capacity to process NGLs  for export. The remainder was used to boost the quarterly distribution by the typical penny per unit, for growth of 6 percent year-over-year, and a 4.2 percent current yield. Enterprise has little interest in stepping up the pace of payouts or making acquisitions while its organic growth prospects remain so promising.

Investors haven’t seemed to mind, lifting the perennially strong unit price another 2 percent since the start of the year.  See this month’s Best Buys for more on why Enterprise remains the single most attractive MLP. Buy EPD below the increased maximum of $75.

EQT Midstream (NYSE: EQM) reported an 18 percent fourth-quarter revenue gain and a 17 percent increase in income before taxes from the year-ago period on Feb. 13, powered by higher transmission line gas throughputs as sponsor EQT (NYSE: EQT) ramps up its natural gas production in the Marcellus shale.

The quarterly distribution rose another three cents per unit for amply covered growth of 31 percent year over year, but had trouble keeping up with the unit price that has risen 12 percent since the beginning of the year, leaving the yield at 2.8 percent.

Still, EQM plans three-cent distribution increases per quarter at least through the end of this year, which would result in another year of 30 percent payout growth. And there’s more where that came from, because production by EQT and others in the Marcellus continues to spiral higher, and EQM is in line for more asset dropdowns from its parent, which has for the moment retained the gathering systems connected to its wells.

The partnership is on our new list of best buys and overdue for a new price target, which we haven’t changed  since recommending it in August, until now. Buy EQM below $70.

Genesis Energy (NYSE: GEL) continued to see strong gains in its offshore crude pipeline traffic and strong demand for the caustic soda byproduct of its refinery services operations. But that was about it for the good news in the Feb. 18 earnings report as temporary business disruptions on land curbed volumes and the fuel oil shipment business remained on the rocks.

The net result was that profit growth ground to a halt, even as the interest expense continued to mount in the wake of recent acquisitions. Cash available for distributions was down 4 percent year-over-year, -barely covering a payout that still rose 10 percent year-over-year, a pace Genesis expects to continue.

With all of the disruptions other than the fuel oil headaches now behind it, the partnership is counting on the scheduled completion of another Gulf of Mexico offshore pipeline (in a partnership with Enterprise Products Partners) and a unit train facility tied to an Exxon Mobil (NYSE: XOM) refinery in Baton Rouge, Louisiana to re-energize growth later this year.  Genesis also announced plans to build a $150 million export/import  terminal for crude and refined products in Baton Rouge, which will connect to an Exxon tank farm and from there to the refinery as well as the train loading terminal. It will be the largest project the partnership has tackled, with a completion date in the middle of 2015.

Longer term, Genesis is counting on the rapid development on new wells in the Gulfof Mexico to boost its offshore pipeline volumes for years to come. The market was in a forgiving mood, and after declining in the immediate aftermath of the results the unit price has rebounded to a 5 percent lead on the year.

Still, any further earnings disappointments would jeopardize the long record of distribution growth of which management is justifiably proud. The valuation is not cheap, and the balance sheet is fairly leveraged. For these reasons, we are downgrading GEL to a Hold.

Kinder Morgan (NYSE KMI) and the affiliated partnership its manages, Kinder Morgan Energy Partners (NYSE KMP) extended their market slumps after Barron’s published a negative cover story rehashing Hedgeye allegations of inflated accounting and slowing growth. The second part is certainly true, though critics have been exaggerating its extent.

The partnership quickly issued a rebuttal that stopped well short of fully addressing the accounting issue raised, but was certainly correct to note that its calculation of maintenance spending for the carbon dioxide injection oil fields has been well known and probably not all that meaningful.

Founder Richard Kinder continued to back his claims that KMI is cheap with his vast checkbook, buying shares worth $9.5 million in the week after the Barron’s article.  But the market doesn’t seem to be eager to follow suit just yet, leaving KMI and KMP down 11 percent and 5 percent on the year, respectively.  Until we see a trend change or a transaction that addresses obstacles to growth at KMP (primarily KMI’s rich incentive distribution rights) our advice remains to defer new purchases. Hold KMI and KMP.

Legacy Reserves (Nasdaq: LGCY) boasted in its year-end release on Feb. 19 about record results, with production rising 33 percent and EBITDA 38 percent thanks to the $500 million spent last year on acquiring Permian basin properties from Concho Resources (NYSE: CXO).

But beyond the acquisition fueled growth there were many negatives, with production costs significantly higher, realization prices lower and the climate for continuing acquisitions challenging given last year’s significant escalation in the price of Permian acreage. Legacy will be spending some $100 million this year just trying to keep production more or less level, and will be hamstrung by the fact that its acreage is not contiguous, a problem that will only get worse if high Permian prices and the perceived need to keep lifting distributions drive it to buy wells elsewhere.

The MLP model has some serious limitations when it comes to upstream drilling, and these are made only more glaring by the fact that so many hyper-efficient corporate drillers are so much cheaper. Take this opportunity to exit Legacy and head for the greener midstream pastures. LGCY is a Sell.

Magellan Midstream Partners (NYSE: MMP) delivered strong results and raised its distribution guidance on Feb. 5 as described more fully in last month’s issue, and the unit price is now 9 percent higher on the year, bumping up again against our recently increased maximum. The refined products and crude shipper is benefiting from a cyclical upswing in fuel demand, and is featured as the second best idea after EPD in this month’s Best Buys. It’s also among the most conservatively managed MLPs out there. Buy MMP below the new target of $77.

MarkWest Energy Partners (MWE) was punished by the market after its Feb. 26 report showcased rising capital spending needs that will keep distribution growth unusually tepid for the next two years.

The good news is that the partnership’s big spending plans are being fueled by strong production growth in the Marcellus and the Utica. The downside is that distribution growth has slowed to a penny per unit per quarter and is unlikely to pick up until 2016.

At that point, MarkWest hopes to get back to the double-digit growth rate it had maintained in the decade since its IPO until quite recently. But that will depend on its big capital investments earning adequate returns, which will in turn require customers to come through on the expected rapid growth in production.

For many analysts, that was a lot of ifs to get through before seeing the rewards two years down the road, and following MarkWest’s results it was downgraded to the equivalent of a Neutral rating by former fans at Wells Fargo, Morgan Stanley, UBS, RBC Capital Markets and Wunderlich; Jefferies had already hopped off the bandwagon ahead of the numbers.

We’re encouraged by the fact that, despite the multitude of downgrades, shares are so far holding near their December lows, and also that the underlying business continues to thrive and grow fast; only the growth in immediate returns has been compromised.

MarkWest remains in the sweet spot of the growth in Northeast energy production. This is a desirable, strategic region for big national MLPs, and if MarkWest were ever to really fall into the market’s doghouse, it would be an attractive takeover target. For the moment, though, expect the bulk of the returns to come via the 5.4 percent yield. Buy MWE below $70. 

 Oaktree Capital Group (NYSE: OAK) reported a 19 percent jump in fourth-quarter net income per-unit and a 52 percent leap in distributable earnings per unit for the year on Feb. 13, as the distressed debt and alternative investments fund manager continued to cash in on strong portfolio performance. But the unit price slid off the record highs in March after Oaktree set a $300 million secondary offering that will dilute the float by some 15 percent in order to buy out the equity interests of insiders.

Oaktree is one of the shrewdest market players around, and if insiders want to sell we wouldn’t advise rushing in to buy, the more so since recent investing restraint likely means Oaktree’s current 6.8 percent yield will wane in the years ahead.

At the same time, the firm’s record and client roster are superb, and we’re happy to nurse our 17 percent return since September on this long-term investment. Continue to buy OAK on dips below the downwardly revised maximum of $52.              

Sunoco Logistics (NYSE: SXL) reported a fourth-quarter earnings dip on Feb. 19, as diminished profit margins in crude marketing tied to the recently narrowed differentials offset increased crude throughput on SXL pipes carrying West Texas crude to its Nederland terminal on the Texas Gulf Coast.

But the differentials should widen out again eventually, while Sunoco will more importantly start to cash in on pending projects to transport NGLs produced in the Northeast to its East Coast export terminal, Ontario, and the Gulf Coast.  

With distributions set to grow 22 percent for a third straight year, coverage secure and a growth trajectory as clear as they come, Sunoco Logistics placed third on the Best Buys List. The unit price is at new highs after quickly erasing the post-earnings dip, and with good reason. Buy SXL below the new target of $91.

Targa Resources (NYSE TRGP) wrapped up fiscal 2013 with a flourish, as higher NGL volumes, prices and processing margins combined with a blossoming export business to boost revenue 41 percent at its operating affiliate Targa Resource Partners (NYSE: NGLS). Distributable cash flow  doubled, while export volumes nearly tripled.

 Targa’s latest dividend represented a 33 percent increase year-over-year, and the company stood by its forecast of increasing it at least another 25 percent this year. The fractionation and export capacity on a Gulf coast makes Targa a strategic asset, a potential acquisition target and one of our best buys. Buy TRGP below $105.

 Williams (WMB) reported on Feb. 19 that adjusted income from continuing operations dropped 8 percent year-over-year in the fourth quarter, with lost revenue from the Geismar olefins plant still idled after a costly explosion in June negating gains on fee-based gathering and transportation contracts.

 Management said the Geismar plant will now not restart until June, though when it does so it will be with added capacity that should provide an immediate bottom-line boost, while much of the lost revenue from the accident is expected  to be covered by insurance.

 Williams also pushed out the targeted in-service date for its proposed Bluegrass pipeline that would carry Northeast NGLs to the Gulf Coast by as much as a year until late 2016, amid indications it was having trouble drumming up sufficient commitments.

 But the positives extend beyond the coming Geismar restart to the strong gathering volumes, promising upside in petrochemicals and the pledge to increase the distribution 20 percent in each of the next two years, bolstering the current 3.8 percent yield.

 The company has also settled with two activist hedge funds that had accumulated sizeable stakes, giving both managers  seats on the board of directors. Another famous investor, Daniel Loeb of the Third Point hedge fund, recently got back into the stock, which he’d previously sold, disclosing a $175 million stake.

Williams remains a bargain given its rapid dividend growth backed by solid coverage and lucrative incentive distribution rights in a sponsored MLP, Williams Partners (NYSE WPZ) and another, Access Midstream Partners (NYSE: ACMP) that will be growing especially fast as the Utica basin is developed. It made our list of best buys. Buy WMB below $46.