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Linn Energy, LLC (LINE) Message Board

  • rrb1981 rrb1981 Dec 27, 2012 10:55 PM Flag

    E&P MLP yield vs US Royalty Trust yield

    A quick back of the envelope check of the yields for the E&P MLP sector shows them yielding around 9.13% (it includes LRE, QRE, MEMP, MCEP, PSE, LGCY, LINE, VNR, BBEP, ARP, EVEP and EROC).

    The US Royalty trusts are yielding 9.30% and consist of ( CRT, HGT, MTR, BPT, PBT, SJT, SBR, NDRO)

    I did leave off the bulk of the modern machinations of trusts that have been produced by SandRidge and Chesapeake

    The "premium" that the mlps are receiving is quite small.

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    • The EBITDA multiple is the back of the envelope measure and even it is very limited.

      Partnerships have very different structures and cost profiles. It is true uninformed investors chase yield and retail investors often push these risky investments far beyond reasonable valuation.

      Unfortunately the LINE Yahoo EBITDA multiple is distorted right now. BUt RLP does not and more importantly does not wish to understand.

      We have the backside of something here but it is no an envelope.


      • 1 Reply to norrishappy
      • So, here are some of the more popular mreits Total Retuns to compare to that list of royalty trusts....

        (December 2011 to December 2012...using the buyupside back-test div. reinv. online calculator) Total Returns:

        MTGE = +46.92%

        AMTG = +56.38%

        MITT = + 32.75%

        WMC = + 13.34%

        TWO = + 40.58%

        NLY = +0.43%

        AGNC = + 20.96%

        CIM = + 21.1 %

        It looks like all of them were profitable with most of the hybrid mreits doing even better, in the last year.

        Now, compare those to the trusts or the mlps.

    • You like any of those trusts?

      Did you look beyond just the yield to the Total Returns?

      CRT = - 42.4%
      HGT = - 60.77%
      MTR = - 47.58%
      BPT = - 36.26%
      PBT = - 36.56%
      SJT = - 41.4%
      SBR = - 32.51%
      NDRO = - 13.89%

      CHKR = - 15.32%
      SDT = - 40.66%
      PER= - 13.88%
      WHX = -66.14%
      WHZ = -24.42

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