Exclusive: Dan Willard Sees 'Really Good Buying Opportunity' In MLPs

Benzinga recently had the chance to speak with Dan Willard, executive director and portfolio manager at Pointe Capital Management, about MLPs.

The Alerian MLP (NYSE: AMLP), which tracks the benchmark MLP index, is down 13.4 percent in 2015. Willard discussed whether the recent weakness in MLPs is a buying opportunity, what trends are currently happening in the MLP space and which MLPs have been outperforming their peers this year.

Time To Buy?

When Benzinga asked if the recent MLP weakness should be seen as a buying opportunity for investors, Willard pointed out just how much of an impact falling prices have had on MLP fundamentals.

"There’s currently a really good buying opportunity in MLPs, and if you look at the Alerian, we are currently at levels that haven’t been seen since 2010."

He explained further, "During that same period, the distributions have increased by 58 percent."

He added that this divergence between distribution levels and price has led to about a 30 percent reduction in the valuation multiples of MLPs.

Related Link: Are You Investing In Bonds?

Trends

Benzinga asked Willard about recent trends he has identified among MLPs, and he discussed the growing appeal of M&A in the current low-price environment. He mentioned Energy Transfer Equity LP (NYSE: ETE)’s bid for Williams Companies Inc (NYSE: WMB) as just one recent potential big-name deal. However, he believes that MLP consolidation will continue in the coming months.

Top Picks

Finally, since Q2 earnings season is currently in high gear, Benzinga asked Willard if any particular MLPs have stood out either positively or negatively based on their recent performance.

According to Willard, Tallgrass Energy Partners LP (NYSE: TEP) "had an outstanding quarter and continues to be one of my favorite names." He also praised Antero Midstream Partners LP (NYSE: AM) for its "outstanding" performance.

However, Willard cautioned that Hi-Crush Partners LP (NYSE: HCLP) has been "the loser of the group" in recent months.

Image Credit: Public Domain