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Blackstone’s Decision Not To Pursue ETP Stake Sends MLP-Focused ETFs Lower

Tuesday, January 10, 2017 10:33
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MLP-focused ETFs were on the decline again on Tuesday, a day after private equity giant Blackstone Group LP decided to end its pursuit of a massive stake in one of the largest Master Limited Partnerships.

As was widely reported yesterday, Blackstone will no longer seek a $5 billion stake in Energy Transfer Partners (NYSE:ETP). Based on ETP’s current market cap around $19 billion, that dollar amount would have given Blackstone a 26% stake in the company.

The reasons for pulling out are unclear, but the fact that ETP is embroiled in controversy surrounding its construction of the Dakota Access Pipeline likely has something to do with it. Protesters have occupied the construction site for months at Standing Rock, North Dakota, seeking to prevent the pipeline from running under the Missouri River — if not to shut down the pipeline entirely.

The news has caused ETP to shed nearly 4% of its value over the past two trading days. Given that ETP is one of the largest MLPs in the world, this news is, in turn, negatively affecting a number of MLP-focused ETFs in the space.

The Alerian MLP ETF (NYSE:AMLP), for example, was trading at $12.70 per share on Tuesday morning, down $0.04 (-0.31%). Year-to-date, AMLP has gained 0.79%, versus a 1.66% rise in the benchmark S&P 500 index during the same period.

AMLP, which counts ETP shares at around 7.77% of its total holdings, currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 22 ETFs in the MLP ETFs category.

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