Midstream MLPs are the Sweet Spot for this Experienced Specialist: A Wall Street Transcript Interview with Robert Chisholm, a Senior Portfolio Manager with Center Coast Capital Advisors, LP

Wall Street Transcript

67 WALL STREET, New York - April 14, 2014 - The Wall Street Transcript has just published its Investing Strategies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Dividend-Paying Stocks - Capital Appreciation - Small Cap Investing - Upside in Small-Cap Stocks - Investing Through Construction Trends - Dividend-Paying Small Caps - MLP Investing - Global Macro Trends

Companies include: Plains All American Pipeline L (PAA), MarkWest Energy Partners LP (MWE), Sunoco Logistics Partners LP (SXL), Targa Resources Partners LP (NGLS), Enterprise Products Partners L (EPD), Magellan Midstream Partners LP (MMP), ConocoPhillips (COP), Enbridge Energy Partners LP (EEP), Crosstex Energy LP (XTEX), Buckeye Partners LP (BPL), Devon Energy Corporation (DVN), El Paso Pipeline Partners, L.P (EPB) and many others.

In the following excerpt from the Investing Strategies Report, an experienced MLP investor and portfolio manager discusses his methodology and top picks for investors:

TWST: I would like to begin with an overview of the MLP Focus Fund and the investment philosophy and strategy for the Fund.

Mr. Chisholm: The Center Coast MLP Focus Fund is a mutual fund, invested 100% in master limited partnerships, including their GP and their C-Corps. Since we are 100% focused on a single asset class, we are structured as a C-Corp, and so our portfolio can have a 100% MLP allocation. We are focused on the midstream portion of the value chain. We seek to eliminate commodity-price exposure from the portfolio. We seek to eliminate weather sensitivity from the portfolio.

We are looking for business models with low demand elasticity, including high barriers to entry; with that we eliminate essentially the exploration and production MLPs because of their high degree commodity price exposure, the propane MLPs because of their high degree of weather sensitivity, and essentially what we are left with is the bread and butter of the MLP space, which is the crude-oil, refined-products, natural-gas and natural-gas-liquids transportation and logistics assets, otherwise known as the midstream portion of the value chain. We target this because it is primarily fee-based cash flows that are moving through pipelines and/or storage or terminals that have long lives and predictable supply throughput. That allows us to have a very durable cash flow investment that is growing at an attractive rate in today's environment.

TWST: What kind of rate is that?

Mr. Chisholm: The underlying portfolio growth rate is between 8% and 10%, and the current yield on the Focus Fund is approximately 6.3%, and the portfolio that is invested in the underlying distribution growth is approximately 8% to 10%, and that is translating into dividend growth for the Focus Fund. When we started the Focus Fund we were distributing $0.05 monthly or essentially $0.60 dividend for the year, and currently we are distributing $0.057 per month, which is essentially $0.684, which represents 14% growth for the dividend since the Focus Fund was launched in January 2011.

TWST: Can you give us some of the benefits for investors in MLPs?

Mr. Chisholm: First and foremost they provide a high form of current income...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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