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Copano Energy LLC Message Board

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  • brumar_lv brumar_lv Jul 11, 2011 1:22 PM Flag

    Volume

    If you mean, "by this group", a MLP, you don't see many institutional investors (like mutual funds) investing in MLP's. Mostly individuals are buying MLP's ... which keeps trading volume low. Also, CPNO is small fry in the MLP world.

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    • I have to disagree with you on CPNO there, but right about the rest of MLPs.

      According to Yahoo - which may or may not be correct - 46% of CPNO's ownership is by institutions, where most other MLPs are half that or less, in the 20% range. That alone could be a big reason for the low volume.

      There aren't that many shares outstanding (66 MM or so), and there just isn't enough going on to make large trading volumes necessary.

      • 1 Reply to rlp2451
      • I'm surprised by that 46% institutional ownership, but it could be correct.

        My comment was based on an Investopedia.com article describing MLP's. Here are a few quotes from the article:

        "MLP's have remained relatively unknown in part due to their low institutional ownership. Mutual funds tend to avoid them. They are a cumbersome investment because funds must send out 1099 forms detailing income and capital gains in November but may not receive K-1 statements from MLP's until February."

        "Tax-exempt institutional funds such as pensions, endowments and 401K plans are restricted from owning MLP's because the cash distributions received are considered unrelated business taxable income and thus are not tax exempt. This is also true for individuals holding MLP's in an IRA."

        "Many individuals avoid MLP's because the tax preparation issues are more complex than for regular stock dividends."

        In spite of the above its clear that institutional ownership exists, and is probably increasing.

 

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