For the MLP Protocol Sprint portfolio, I pursue higher risks with higher potential total returns. I use an opportunistic and concentrated approach that leverages MLPs and related C-Corps. I will also invest in recent MLP IPOs.
My investment approach is guided by a relative valuation ranking methodology. I invest in smaller, riskier MLPs to potentially capitalize on their potential for higher yields and overall total returns.
I expect this portfolio to generate portfolio volatility that exceeds the S&P 500 Index. The portfolio may have higher turnover driven by changes in relative valuations and changing projected yields.
I manage positions based upon peer segment MLP Protocol rankings (www.MLPprotocol.com
). The rankings take into account underlying company fundamentals and valuations coupled with projected distribution growth and resulting estimated forward yields.
I use market data taken from www.finviz.com
. I use all underlying company financial data from their respective SEC filings and company press releases.
Also, I use analytical tools that I personally created for MLP Protocol. I use the rankings generated by these analytical tools as the foundation for my investment ideas and views.
For this strategy, I take a non-diversified approach focused in energy related MLPs.
Due to the small portfolio size, the portfolio will typically be concentrated in 12 positions or less and will not have any strict position or concentration limits. Cash is a viable position so I may not be fully invested at all times.
The number of holdings will vary from zero on the low end to approximately a dozen on the high end. The number of holdings is dependent upon investment opportunities in the market and overall valuations.
If in my opinion MLP valuations become excessively exuberant, I will tend to have fewer holdings.
Conversely, if overall MLP valuations remain reasonable, then the number of positions will tend to be on the high end, driven by the pursuit of potential higher relative yield and total return.
I will close positions based on expected or actual deterioration in underlying fundamentals or what I believe are excessively high valuations. When I believe valuations are too high, I will exit positions and redeploy capital into less expensive opportunities that I believe offer better return potential.
The portfolio focuses primarily on non-financial company MLPs (mainly energy related ones) that typically generate a K-1 tax form. I will also invest in MLPs that have elected to be taxed as C Corps and also any C Corp deemed to be related to an underlying MLP (General Partner owners for example).