Table of Contents
Midstream Energy MLPs: High Conviction in Stock Values ................................................................................................................3
Our Stock Picks: New Coverage ........................................................................................................................................................4
What’s in the Price? ............................................................................................................................................................................5
Our Other Stock Picks:........................................................................................................................................................................6
New Debates: Economy, Institutional Money & MLP Business Model ................................................................................................8
Ongoing Debates: Macro Challenges, Commodity Prices & Access to Capital...................................................................................9
New Debates:
New Debate 1: Impact of the Economy on MLP Cash Flows? .................................................................................................11
New Debate 2: Will Institutional Money Fully Embrace MLPs? ................................................................................................12
New Debate 3: Is the MLP Business Model Broken?...............................................................................................................13
General Partners: Advantages, Investment Opportunities & Basics .................................................................................................14
Value Proposition: High Yields + Modest Growth.............................................................................................................................16
Valuation Framework: Total Return Is the Key..................................................................................................................................17
Investment Concerns ........................................................................................................................................................................19
New Coverage Overweights ...........................................................................................................................................................20
Energy Transfer Equity (ETE, $21, Overweight, Target $29): Valuation Does Not Reflect Growth Outlook ...............................21
Western Gas Partners (WES, $15, Overweight, Tgt. $18): Fee-Based Revenue Stability and Expected Drop Down Growth....24
New Coverage Underweights.........................................................................................................................................................27
DCP Midstream (DPM, $13, Underweight, Target $15): Commodity and Volume Exposure Prompts Cautious Outlook..........28
Williams Partners (WPZ, $11, Underweight, Target $13): Strong Sponsor Tempered By Commodity Exposure .....................31
New Coverage Equal-weights ........................................................................................................................................................34
Buckeye GP Holdings (BGH, $16, Equal-weight, Target $18): Diversification Provides Growth Platform.................................35
Enterprise GP Holdings (EPE, $23, Equal-weight, Target $26): Multiple Platforms For Growth ...............................................38
Magellan Midstream Holdings (MGG, $18, Equal-weight, Target $20): GP Interest in Blue Chip MLP.....................................41
NuStar GP Holdings (NSH, $21, Equal-weight, Target $22): Interesting Long-Term Thesis; Limited Near-Term Visibility .......44
Sunoco Logistics Partners (SXL, $53, Equal-weight, Target $57): Full Valuation Limits Upside...............................................47
TC Pipelines (TCLP, $30, Equal-weight, Target $31): Steady Performer, Muted Near-Term Outlook ......................................50
TEPPCO Partners (TPP, $23, Equal-weight, Target $24): Diversified Asset Base, Growth Outlook Muted .............................53
Williams Pipeline Partners (WMZ, $17, Equal-weight, Target $17): Attractive Asset, Units Likely Range-Bound.....................56