Good old Fashioned Master Limited Partnerships (MLPs)
Yesterday the stock market suffered its worst day in over a year. By May 21, 2010, the Euro has dropped by 15% and the U.S. stock market has declined over 10%. Workers in Greece are striking, causing violence. On a more positive note, my lovely daughter Perry graduated from college.
On the way into my office in Wayne PA, How Much Gain Reduction Should You Use On The Master Limiter? I drove by the Williams natural gas pipeline facility in Malvern. It is an enormous pumping station that sends natural gas on its way across the state and into areas where it connects with other pipelines doing the exact same thing. I drive by this complex nearly every day. Williams, a multiple billion dollar master limited partnership (MLP), is just a rock solid pipeline operator (according to Wells Fargo) with an extended history of paying its owners steady and growing returns. An owner is somebody who owns the Williams MLP which trades on the New York Stock Exchange.
I got out of my car and paid attention to the steady hum of the compressor engines which propel natural gas through hundreds of miles of pipelines. As a manager of Williams (and other pipelines), that humming sound implies that my company is moving natural gas in the united states and paying me the toll.
I listened carefully to the hum of the engines and looked at the massive pumping station with the sun reflecting off the communications tower. The problems with Greece and the Euro didn’t seem to alter anything here. I don’t think the issues with Europe, the Euro and the stock market affect the operations of any solid U.S. pipelines.