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What Dragged Down MLPs Last Week?

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Updated

MLPs were weak last week

MLP sluggishness continued last week, which ended August 11, 2017. The Alerian MLP Index, which tracks the performance of 50 energy infrastructure MLPs, ended the week 4.4% lower. Of the total 96 MLPs, 81 ended in the red last week, while the remaining 15 ended in the green. Their performances were dragged down by the general negative sentiment in the global markets due to the rise in geopolitical tensions between the United States and North Korea and the weakness in the midstream energy sector due to a major sell-off in Plains All American Pipeline (PAA). PAA stock fell 20.4% last week following weak earnings and the announcement of plans for a second distribution cut. We’ll look at that more in the later parts of this series.

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Among the other top MLPs by market capitalization, Energy Transfer Partners (ETP), Enterprise Products Partners (EPD), and Williams Partners (WPZ) fell 3.3%, 2.6%, and 1.9%, respectively. The Alerian MLP ETF (AMLP), which is comprised of 25 energy MLPs, fell 6.3%. AMLP underperformed both the Energy Select Sector SPDR ETF (XLE) and the SPDR S&P 500 ETF (SPY) last week. XLE and SPY fell 2.6% and 1.3%, respectively.

Fund flows

Despite the recent weakness, MLP funds continue to see net inflows. That might reflect the attractive valuations for MLPs. The Alerian MLP ETF had a net inflow of $66.2 million for the week ended August 11, 2017. The JPMorgan Alerian MLP ETN (AMJ) received $152.3 million of inflows during the week.

In the next two parts of this series, we’ll look at the top MLP losers and gainers for last week. That will be followed by last week’s earnings wrap-up, technical indicators, and rating updates.

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