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Energy Transfer Partners, L.P. Message Board

  • bettheranch2002 bettheranch2002 May 4, 2013 2:38 PM Flag

    ETP vs ETE

    The general partner (ETE) has significantly outperformed the LP (ETP) over the past year. Pull up a one year chart of ETP and compare it with ETE and see for yourselves. Investors sometimes get sucked into going after the higher yield of the LP offers but the GPs because of their IDRs are often times are better investments. This certainly has been the case over the past year with ETP vs ETE. Full disclosure: I'm long ETE. G/L to all.

    Sentiment: Hold

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    • Kindly put: ETE has been a much better investment than ETP, period. Get on the right side of the track and buy the GP (ETE) instead of (ETP). The chart does not lie.

      • 1 Reply to bettheranch2002
      • (OT) KMI is the GP to KMP, EPB and KMR. Since Rich Kinder took KMI public (again) the GP (KMI) has also outperformed the LPs. Guys, the GPs are not stupid and MLPs are structured with IDRs which usually cause the GP to be the winner (if there's still a GP in the structure). After Dan Duncan died Enterprise Products GP was folded into the LPs so there isn't a GP anymore. EPD is rock solid but the yield is low and the unit price will get punished when interest rates rise whenever the Fed decides its time to let them rise. Remember there's a historical spread of 250 to 350 basis points between the yield of MLPs and the yield of 10 year treasury notes. MLPs have performed so well because interest rates have fallen to historical lows causing unit prices to rise but you must be mindful of the direction of interest rates over the long run because MLPs are interest rate sensitive investments. The danger is the market will front run the fed letting interest rates rise and large investors will begin dumping MLPs so don't get greedy or be afraid to dial back your exposure to winners. I had $350K+ in L/T capital gains on EPD and OKS because of unit price appreciation so I significantly trimmed both positions to lock in profit. I have no regrets because greed kills portfolio performance. Interest rates are not going to rise next week but be careful because the market will move (anticipate) before the Fed announces they are going to let rates rise. Again, you must pay attention to interest rates if you're going to invest in MLPs. In terms of performance, MLPs have been perhaps the best asset class to invest in this past decade compared to just about any benchmark index.

        Sentiment: Hold

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