Patience Will Reward Upstream LP Investors
Upstream limited partnerships are down--but not out.
Let's say you buy tickets to the greatest party of the year. There will be music, dancing, free refreshments, and U2 might make an appearance if Bono can make it back from his latest meeting with the U.N. Security Council. Then, on the day of the party, you hear a rumor that the high-priced tickets are now getting sold at steep discounts. Looks like the ticket sellers are worried no one's going to show. Your best friend calls and says the rumors must be true. He went to the party and the deejay was still getting set up. The refreshments weren't free, after all. So you bemoan your wasted tickets, and you call all your friends and tell them not to bother going to the party.
Glory Days for LPs...
In a Stock Strategist article published last summer, we discussed the growing buzz around upstream oil and natural-gas limited partnerships (LPs). The upstream LPs were being afforded premium valuations because of their acquisitive growth prospects and their tax advantages. Exploration and production companies were looking at LPs as a way of monetizing mature assets via spin-off or sale. Many new entrants were expected to come to market.
Kish Patel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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