Kinder Morgan Deal Bodes Well For Pipelines
The old adage about "location, location, location" does not only apply to real estate purchases, says Brian Watson, portfolio manager of the SteelPath MLP Alpha Fund (MLPAX), but to oil pipeline stocks as well.
"You want own a pipeline coming from producing regions going to quickly growing production groups. For example, it's great to have a pipeline flowing towards Florida because we know population growth there is strong," says Watson.
The $300 million fund, which was launched in March 2010, has returned 2% over the past year, better than 54% of its peers in Morningstar's energy category.
One of Watson's largest holdings is Buckeye Partners (BPL) which bought terminals along the Gulf Coast from BP (BP) in the wake of the Macondo oil spill. Unlike most other terminals, Buckeye's recent additions are advantageous because they can accept the very largest oil tanker ships."These assets were not being utilized as they should have been," says Watson . "We think Buckeye will do a much better job and grow the revenue of those assets significantly." As for M&A in the pipeline industry, Watson expects it to pick up in the wake of the proposed El Paso (EPB) and Kinder-Morgan (KMP) merger, a deal he said makes a lot of sense for both companies. "El Paso's pipeline assets were amongst the best in the industry and Kinder-Morgan will only increase their value," says Watson. "It adds perfectly to Kinder's current asset profile. It's really were the assets ought to be."
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