Financial Planner,Fletcher Wealth Management
EducationEast Tenessee State University
Oil and Gas MLPs
This strategy aims to capitalize on tax efficiencies and income generated by oil and gas master limited partnerships selling at a discount to fair value.
Instead of directly paying taxes on its income, a limited partnership (LP) passes its gains and losses directly to its individual limited partners. This “flow-through” allows investors to avoid the double taxation that normally occurs with the corporation structure. The LP market is illiquid, so this strategy will focus on purchasing master limited partnerships (MLP), which are simply LPs that are publicly traded. Since, according to the tax code, MLPs may participate only in certain businesses, this strategy’s focus will be on MLPs that compete in the extraction, production, process and/or transportation of oil and gas.
A Morningstar screen identifies oil and gas master limited partnerships traded on an United States stock exchange that are selling at a discount to fair value. Additional research is performed using publicly available information (e.g. financial statements, prospectuses) to determine company strength and stability. Other factors, such as the macroeconomic environment and government regulation, are also considered before a purchase is made.
The portfolio will have up to 10 holdings with each having a weighting of no more than 15% of the model. This model may hold cash as it waits for opportunities.
Selling occurs when a holding hits a predetermined target price, develops problems with its operations, or can be replaced by a more attractively valued holding.
Speciality asset class
Covestor inception July 27, 2011
|as of August 29, 2014
||Manager (net of fees)
|Past 30 days
|Past 90 days
|Past 365 days
|Since Covestor inception (Annualized)
Last 365 days
|as of August 29, 2014
||Manager (net of fees)
|Best 30 days
|Worst 30 days
|Value-at-risk (95%, 1 week)
||vs. Alerian MLP
||vs. S&P 500
Average trades per month 0.2
Past performance is no guarantee of future results.
Performance of the portfolio manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions and broker commissions. Manager returns include trades and positions that fail Covestor's trading rules, as a result, actual client returns will differ. Covestor advisory fees are simulated and applied retro-actively to present the portfolio return "net-of-fees".
Average client returns are calculated by Covestor and are composed of the average, time-weighted returns of all active client investments (some of which may contain investment restrictions) to the underlying portfolio. These daily average returns are then linked together for the timeframe presented. These returns include cash, dividends, earnings distributions, brokerage commissions and Covestor advisory fees.
All graph data is as of the end of day for the referenced period, unless otherwise specified. The investment minimum is the minimum investment required to follow a particular portfolio. The minimum amount is determined by Covestor, based on the characteristics of the underlying portfolio. It should not be considered as specific investment advice for your investment situation.
The performance charts are provided for informational purposes only, and should not be used as the basis for making an investment decision. Variables such as corporate actions or foreign exchange may affect daily performance displays. We rely on mathematical formulas, computer programs, and pricing information from third-party vendors to provide these returns. Neither Covestor nor any of its data or content providers shall be liable for any errors in this information or any actions taken by you in reliance upon this information.
Benchmark returns have been calculated by Covestor using a time-weighted calculation of daily index valuations. Benchmarks presented are total return and therefore inclusive of cash, dividends and earnings distributions but not transaction costs.
Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.
All Portfolio Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Portfolio Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history is available upon request. Portfolio classifications are provided by Covestor, and are intended to serve as a general guide.
Transactions that are marked as "Replicable" passed Covestor's trading rules and were eligible for replication at the time of execution, subject to individual
client constraints. Eligibility for replication may change over time. Actual client investment trade activity may vary.
Index returns do not reflect any management fees, transaction costs or expenses. Individuals cannot invest directly in an Index.