Barron's Recap: The Changing World Of MLPs
This weekend in Barron's online: a roundtable discussion of the changing landscape of master limited partnerships, and the prospects for the Washington Post, BNP Paribas, HD Supply, Isis Pharmaceuticals and Redbox.
"MLP Boom or Bust?" by Dimitra DeFotis.
Master limited partnerships (MLPs) have benefited from the U.S. energy boom and yield-seeking investors. However, the economic winds are changing. So Barron's wondered, what's next for this quirky corner of the market?
MLPs avoid corporate taxation because they are partnerships, and the pay out most of their cash flow to shareholders, who are considered partners. Before 2012, they beat the Standard & Poor's 500 for 11 consecutive years, by an average of 20 percentage points. Today, payouts average of about six percent.
In a time of rising interest rates, though, MLPs not only face higher borrowing costs, they may become less attractive than other income-producing investments. Barron's asked a roundtable of experts whether the outperformance of MLPs could continue.
See what the roundtable participants feel the effect of rising interest rates and an improving economy will be on MLPs. The experts share whether they feel MLPs are fairly valued now and where they think the sector will be in a year. And they discuss whether they favor the wave of new MLPs or more established players.
The article includes a chart detailing their five top MLP picks, which include Enterprise Products Partners (NYSE: EPD) and Magellan Midstream Partners (NYSE: MMP), with comments about what makes each of them attractive.
"Washington Post Co. Looks Undervalued" by Andrew Bary suggests that after the sale of its flagship newspaper, the Washington Post (NYSE: WPO) looks like a nice investment. The article also ponders whether Warren Buffett will buy the whole thing.
Jonathan Buck's "Banking on Growth in Europe, and Beyond" says that BNP Paribas has emerged from the financial crisis as the best-capitalized bank in Europe. The Paris-based company has plans to expand well beyond its home turf. See why the shares look attractive.
In "The Home Depot of Commercial Construction," Jack Hough makes the case that HD Supply (NASDAQ: HDS), a leading distributor to commercial builders, is poised to benefit from the coming rebound in commercial construction.
Isis Pharmaceuticals (NASDAQ: ISIS) was up 200% year-to-date, thanks to the biotech boom, according to Leslie P. Norton's "At Isis, Less Than Meets the Eye." The article discusses why the stock could fall 30 percent.
"Outerwall's Box Full of Money" by David Englander says Outerwall's (NASDAQ: OUTR) Redbox video-rental kiosks could surprise short sellers. The article makes a case for the shares to rally as much as 20 percent.
In Dyan Machan's "Planting the Seeds of Growth," the CEO spotlight is turned on Hugh Grant of Monsanto (NYSE: MON). See how Grant is deft at countering critics of Monsanto and enriching its shareholders.
Sarah Max's "Putting Biotech Stocks Under the Microscope" is a profile of Rajiv Kaul, Fidelity Select Biotechnology fund manager. Kaul not only has watched the industry turn from science fiction to medical fact, he has invested profitably along the way.
David Rubenstein, co-founder of the Carlyle Group (NASDAQ: CG), is interviewed in "The Next Private-Equity Investors: Mom and Pop" by Lawrence C. Strauss. Rubenstein predicts mutual funds eventually will offer small investors a chance to get in on the action.
"Divided Responsibilities" is an editorial commentary by Alex J. Pollock that suggests the Federal Reserve has too many jobs to do all of them well.
Columns in this weekend's Barron's discuss:
- Amazon.com (NASDAQ: AMZN) Chief Jeff Bezos as the new Charles Foster Kane
- Why the second-half of the year could be rougher than many think
- The public-sector employment myth
- Ways to boost Washington Post revenue
- Whether mutual fund investors should be chasing returns
- A brief boost for oil exchange traded funds (ETFs)
- Dividend hikes from Scotts Miracle-Gro (NYSE: SMG) and others
- The peril that Washington gridlock poses to portfolios
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