MLPs That Hedge Commodity Risk
Master limited partnerships have flown high of late, but Elliott Gue shares a couple of names that have potential to continue climbing.
We're talking MLPs with Elliott Gue. Elliott, so MLPs have been extremely popular recently as everybody dives into income. Could you explain what MLPs you like, what sectors, and why you like them?
Well, most publicly traded Master Limited Partnerships are actually involved in the midstream energy business-basically transporting and storing oil and natural gas-but there are a few that are actually involved in the upstream energy business, actually producing oil and gas and selling it. Two of my favorites there are Linn Energy (LINE) and Vanguard Natural Resources (VNR).
Vanguard has nothing to do with Vanguard Mutual Funds.
It's entirely different.
It's an entirely different organization. I'm not sure why they chose that name. I know they have been talking about changing the name at one point, but they have no affiliation whatsoever.
Linn yields about 7%, Vanguard yields over 8%, almost 8.5% right now. Both are involved in basically the same business: They own basically mature oil and gas wells. They produce oil and gas from those wells and they sell it.
But the key thing for MLPs is they typically hedge all their production or most of their production for years into the future.