MMP - Magellan Midstream Partners

[khturbo]

Historically the best run MLP. Track record speaks for itself: 804% return since 2005 compared to 223% for the S&P 500, 260% for $BRK, and 513% for $BAM.

 

I just posted a writeup and thought it would be of interest for anyone interested in the space or even generalists:

 

https://concentratedcompounding.com/magellan/

 

Looks like 12-13% IRR at the very least to me with low leverage.

 

 

[khturbo]

 

Here's the twitter thread with a few good follow up comments and thoughts on it.

[Spekulatius]

While I agree that MMP is cheap , they have a weak outlook for this year and I also think that their dependency on refined products warrants merit. I would rather own KMI or EPD which are both more diversified and geared towards NG.

 

With an MLPs a long holding period is paramount, since a sale will recapture tax on distributions, which can give you a nasty surprise.

[khturbo]

Ya I think the weak outlook for this year is why the stock has been so weak. They didn't put any growth projects into service last year but have a few quite big ones over the next 12 months which will drive quite strong EBITDA and DCF growth.

 

If you're referring to the actual guidance, they always just guide for DCF to be 1.2x their planned distributions then they beat it every year. Not sure why they even bother to do that.

 

I do like both of those as well. I own a bit of KMI but have sold most to buy more MMP as MMP has underperformed quite significantly over the last year or so. I just need to wait for a little while so that KMI goes into the LT cap gains bucket for a few clients. EPD is also obviously excellent. I guess that's the thing - all the big players look interesting. I worry less LT about MMP because of the stellar management and because they have less pricing based business than others.

[LearningMachine]

Wonder why insiders own so little, and why Mike Mears has been selling shares he gets for free throughout his tenure there.