67 WALL STREET, New York - December 10, 2013 - The Wall Street Transcript has just published its Top Ten Equity Analyst Interviews of 2013 Report. This special feature contains expert industry commentary through in-depth interviews with award winning Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Oil & Gas Master Limited Partnerships
Companies include: El Paso Pipeline Partners, L.P (EPB), Copano Energy LLC (CPNO), Williams Companies, Inc. (WMB), Linn Energy, LLC (LINE), Berry Petroleum Co. (BRY), Vanguard Natural Resources, LL (VNR), Legacy Reserves Lp (LGCY), ONEOK Inc. (OKE), Williams Partners L.P. (WPZ), ONEOK Partners, L.P. (OKS), AmeriGas Partners LP (APU), Spectra Energy Partners, LP (SEP)
In the following excerpt from the Top Ten Equity Analyst Interviews of 2013 Report, a highly experienced and award winning research analyst discusses his methodology and top picks for investors:
TWST: If you would, start with an overview of your coverage universe.
Mr. Sighinolfi: It's fairly diverse. At its core it's the diversified gas space, which incorporates companies that do two or more things within the natural gas value chain, typically a utility component and then some sort of midstream, or in some cases an upstream component as well, and then associated MLPs.
More and more of the coverage space over the course of the last couple of years has had parent companies create MLPs that they have then sold assets into, and so we cover those MLPs as well. And then because we had MLP exposure and we had some upstream exposure, the bank felt we should cover the upstream MLPs as well, and so we have that coverage universe as well.
TWST: Generally speaking, have MLPs been garnering increased interest from investors?
Mr. Sighinolfi: Yes. Certainly at UBS, they've been a key component and a key source of investor interest for many years, because we have such a large wealth management network. I would say the interest in MLPs has grown in the last several years as the structure itself has proliferated out to more operating groups than it once did. Ten years ago we had 30 MLPs at roughly $30 billion in market cap; now we have over 90 with over $350 billion in market cap. And so as the space has grown, I think the interest has also grown.
I have seen many Barron's articles about MLPs this year, for example, which I think also has coincided with just a lack of yield in many other places and an ongoing quest for tax-deferred income. It's been a perfect storm of growth in terms of the number of companies in the sector and the interest from investors far and wide for tax-deferred income. More institutions are starting to play the group. We've had a number of funds raised in the last several years to play this space and more dedicated MLP institutional investing. That's been a newer component over the last two or three years and was showcased by the fact that Institutional Investor made MLPs a standalone category several years ago.
TWST: How is all that impacting valuations today?
Mr. Sighinolfi: Valuations in the space continue to run, and we see EV/EBTIDA multiples for the MLPs continue to tick up. We also see transaction multiples continue to tick up. I think that speaks to several things...
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