AMZ Total Return: 4.8%
Annualized Standard Deviation: 12.6%
Average Yield: 6.2%
Average Spread to Treasuries: 446 basis points
Top AMZ Performer: Calumet Specialty Products Partners (CLMT)
Bottom AMZ Performer: Natural Resource Partners (NRP)
Median AMZ Daily Liquidity: $719 million
In 2012, the AMZ gained 4.8% versus the S&P500 which increased 16.0% on a total return basis; this underperformance marked the end of a 12-year streak of MLPs outperforming the S&P500.
The Interstate Natural Gas Association of America (INGAA) releases a Jobs & Economic Benefits of Midstream Infrastructure Development: US Economic Impacts Through 2035 study in early February, quantifying the economic impact $200 billion of energy infrastructure capital investment would bring through 2035: 104,579 jobs, $141 billion in labor income, $16.8 billion in state and local taxes, and $30.9 billion in federal taxes. And so, the trend began of MLPs including in press releases how many jobs a new pipeline could create.
On July 17, 2012, the second exchange traded note tracking the Alerian MLP Index (AMZ) was launched by UBS, the ETRACS Alerian MLP ETN (AMU).
The growing trend of non-traditional MLPs continued through 2012: Northern Tier Energy (NTI) completed its IPO in July, making it the first refining MLP IPO since 2006 or first refining MLP with a variable distribution policy; Hi-Crush Partners (HCLP) completed its IPO in August, becoming the first Production & Mining | Frac Sand MLP; and Seadrill Partners (SDLP) completed its IPO in October, becoming the first Services | Upstream MLP.
The registration of Linn Co, LLC (LNCO) in June and its IPO in October would represent a first-of-its-kind structure in the MLP space. An entity structured as a corporation, whose sole purpose is to own LP MLP units and pay cash dividends. While increasing investor participation in MLPs through a corporate structure was a growing trend, Western Gas Equity Partners (WGP), the GP of Western Gas Partners (WES), completed its IPO in December, not structuring itself as a corporation. Instead, WGP chose to use the traditional “GP structured as an MLP” model—a model that had not been used since the IPO of Penn Virginia GP Holdings (previous ticker: PVG) in December 2006.
In November, the International Energy Agency (IEA) published its World Energy Outlook, predicting the United States to be the number one oil producer in the world by 2020, and capable of meeting its own energy needs by 2035. And so, energy independence became a part of our vocabulary.
2016.05.11 11:35am CST – Edited to correct the names of the top and bottom AMZ performers.