It’s three consecutive years at No. 2 for Richard Gross, who also ranks second in Natural Gas. One client applauds the Barclays researcher for doing “a great job in providing a macro view of the overall master limited partnership space.” Shale development has triggered an enormous wave of energy-infrastructure expansion, and mergers and acquisition activity has exploded as companies scramble to position away from dry gas toward crude oil and natural-gas liquids, according to Gross. “This has laid the foundation for a surge in capital spending that will last well into the remainder of this decade,” he adds. “In this environment investors are paying up for visible growth, which primarily comes from undrilled locations that need more development and the sale of assets warehoused at the general-partner level.” Looking ahead, he sees the best prospects for companies focused on oil, NGL and export markets. Equally important, he adds, is low capital intensity, since MLPs grow by funding externally with debt and equity. The best performers are companies that issue proportionally less equity as a function of average daily trading volume, implying that they’re getting higher returns on their spending programs, he explains. The large-cap MLPs Gross favors are Dallas’s Energy Transfer Equity; Houston-based Enterprise Products Partners and Plains All American Pipeline; and Tulsa, Oklahoma–based Magellan Midstream Partners. Smaller-cap names he recommends are Pittsburgh-based EQT Midstream Partners, Denver’s MarkWest Energy Partners; and Woodlands, Texas–based Western Gas Partners. — Carolyn Koo |
The 2013 All-America Research Team: Master Limited Partnerships, No. 2: Richard Gross