Darren SissonsAlerian MLP ETFAMLPRISKYJun 18, 2020
He is not a big fan of ETFs. MPL ETFs get around foreign tax with-holdings. You are investing in an environment of weak energy prices. If you have some riskier money you might look at this one. He would not tend to buy it for his clients. He thinks it will have some resistance here but he likes the structure.
Above $35, has sold all exposure to AMLP. Closer to $30, it is a good place to enter for a trade. Probably will do well buying dips and selling rallies in the near term. Maximum upside is probably $40. Long term, there are some challenges.
If you are getting exposure to US energy, he expects US pipelines to be at capacity so playing it through the MLP is a good strategy. The dividend cut was in response to the pressure on energy price. He owns for the yield and not cap gains.
He has held this as his exposure to US energy where he is not bullish for the long term. US Pipelines will be pumping at capacity for a long, long time. We might see an anti-pipeline movement in Canada. It's risky but he is not selling at this point.
US Pipeline infrastructure Limited Partnership. He is nibbling away at it. If we get a little bit weaker, he thinks the energy space is a little bit cheaper. He likes this for people who are seeking good yield in their portfolios.
It is a US pipeline play. He thinks it will be in a trading range for several years. It is at the bottom of a trading range right now with a great distribution yield, so that is how he is playing it. He still likes it and owns it and bought a little more on tax loss selling.
A tax complication says that the distributions from MLPs are considered business income, so you could be subject a 40% withholding tax. If you're American, the MLPs could have a nice bounce. If global growth stabilizes, energy names could do quite well.
He did recommend it a while ago when fracing became a big thing in the US. He exited when momentum indicators began to rollover. While the oil and gas sector remains and energy stocks remain cheap, he has yet to see any indication of breadth returning to the space. Energy continues to be a place that is not attracting investment. The risk is that energy has become a mass manufacturing business. Any tick up in oil prices attracts more supply quickly. He will wait to see a real positive turn. Yield 9%
This is the way he is playing the US energy sector. He is starting t nibble again. He thinks the dividend is good and safe. He would nibble into the tax loss selling as it happens this week.
There is a risk of tax loss harvesting on this ETF. He is not at his limit in this position yet. It is the best way to harvest yield and play US energy in a defensive way.
(A Top Pick Aug 07/18, Down 12%) A commodity down turn impacted this. Pipes and mid-stream assets in the Permian, where there is still some good tailwinds. He continues to own it. No fundamental reason to step away. Pays an 8% dividend.
He bought it for the 8% yield, not growth. He expects it to stay within $9-11 for the next five years. He sells in the upper range and buys back in the lower.
The master limited partnership trust. The yields are very high because they pay all the yields of the holdings out. We will be very well supplied in the US for oil. Sell at $11 and collect 6-7% for Canadians in yield after tax.