Dividend Hunts, Diversifying Through MLPs (AMJ, MLPI, MLPN, KYN, KYE)

Administrator — Wed, 23 Jun 2010 15:56:52 +0000

Being an income-oriented investor in chase of dividends and chasing returns of capital has driven many investors to Master Limited Partnerships, or MLPs, over the years. With Treasuries paying next to nothing for short-term rates and with energy prices being relatively stable, this is a sector that may still hold up well. Many investors have gone after the ETF and ETN products in the sector in order to avoid the risks of an individual partnership risk. JPMorgan has the Alerian MLP Index ETN (NYSE: AMJ), UBS has the E-TRACS Alerian MLP Infrastructure Index ETN (NYSE: MLPI) and Credit Suisse has the new Cushing 30 MLP Index (NYSE: MLPN). Morningstar just gave a run-down of each of these ETN products to show the pros and cons.

In the arena of more broadly diversified MLP investing, you can go to the closed-end funds such as Kayne Anderson MLP Investment Company (NYSE: KYN) and the Kayne Anderson Energy Total Return Fund (NYSE: KYE). With these, there is the notion of a premium or discount to Net Asset Value. Of the two, the first (KYN) offers more liquidity, a higher market cap, and offers a higher implied dividend yield.

Morningstar does not address the Kayne Anderson vehicles because these are closed-end funds rather than ETF or ETN products. Here are some of the implied price ranges of the last 52-weeks for you to see a comparison:

JPMorgan Alerian MLP Index ETN (AMJ) $30.13; 52-Week Range: $21.04 to $31.98
Credit Suisse Cushing 30 MLP Index ETN (MLPN) $19.31; 52-Week Range: $17.41 to $22.87
UBS E-TRACS Alerian MLP Infrastructure ETN (MLPI) $25.50; 52-Week Range: $22.30 to $27.50
Kayne Anderson MLP Investment Company (KYN) $25.50; 52-Week Range: $18.11 to $27.54
Kayne Anderson Energy Total Return Fund (KYE) $23.77; 52-Week Range: $15.45 to $26.39

There are some serious concerns in each of these that need to be considered once these become ETN products. For a full breakdown of the ETN strengths and weaknesses and a relative comparison of each, you can read the Morningstar article.

JON C. OGG

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Filed under: Dividend, ETF, Mutual Funds, Oil & Gas Tagged: AMJ, KYE, KYN, MLPI, MLPN

Blackstone Puts $500 Million Into Pipeline Company (BX, KYN, KYE, KED, EPD)

247wallst — Wed, 25 Jun 2008 08:02:26 +0000

The Wall Street Journal has reported that The Blackstone Group LP (NYSE:BX) will invest some $500 million into a new pipeline company, Crestwood Midstream Partners LLC. Crestwood was formed in December 2007, with an initial investment of $150 million from the Kayne Anderson private equity energy funds, and you will see there are several of them:

Kayne Anderson MLP Investment Company (NYSE: KYN)
Kayne Anderson Energy Total Return Fund (NYSE: KYE)
Kayne Anderson Energy Development Company (NYSE: KED)

A Blackstone-owned hedge fund, GSO Capital Partners, is also participating in today’s deal.

Crestwood is headed by Robert G. Phillips, former chief executive of Enterprise Products Partners (NYSE:EPD), who joined Enterprise following its merger with GulfTerra in 2006. The WSJ notes that Blackstone teamed up with Warburg Pincus just a week ago on a $500 million investment in Kosmos Energy, an West African offshore oil exploration company.

Paul Ausick
June 25, 2008

24/7 Wall St. » KYE

Dividend Hunts, Diversifying Through MLPs (AMJ, MLPI, MLPN, KYN, KYE)

Blackstone Puts $500 Million Into Pipeline Company (BX, KYN, KYE, KED, EPD)