Profit From Pipeline Stocks, Says Fund Manager
Natural gas and pipeline companies are thriving due to a weak dollar and high overseas demand, says Matt Berler, co-manager for the Osterweis Fund (OSTFX), as a result he is bullish on Williams Companies (WMB) and Magellan Midstream Partners (MMP).
The $1.4 billion fund, which garners 4 stars from Morningstar (MORN), is down 2% over the past year, putting it in the 97th percentile of Morningstar's mid-cap blend category. Over the past five years, the fund has returned an average of 1.3% annually, ranking it in the fund-tracker's 56th percentile.
"Williams has a terrific collection of pipeline and natural gas processing assets. I view it as less of a play on natural gas prices as opposed to natural gas liquids that go into a thriving petrochemical business here in the United States," says Berler.
Berler also likes Magellan, which operates a refined products system pipeline that runs from Houston to the mid-West. He likes that fact that its assets are strategically placed for growth in the next few years, benefiting from the development of the oil industry in West Texas.In addition to its natural gas holdings, the fund also has positions in several companies that are in the process of restructuring, including American Water (AWK), Kraft (KFT) and Hewlett Packard (HPQ). Osterweis took a position in Kraft after hearing rumors the company would restructure to maximize its margins in the United States. Another attraction was its thriving international consumer packaged goods business especially with the addition of Cadbury, which he says will help it sell brands like Oreos to emerging markets like India.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV