Now, in Defense of MLPs
On Friday, I made the case for why I don't use master limited partnerships in the dividend-capture strategy. Besides complex tax accounting, they are owned for the income and trade efficiently, making it difficult to exit after the distribution. This is indicated in the trading patterns of strength during the months in which the payout occurs. A better trading strategy would be to buy in the front month and sell before they go ex-distribution.
Forgetting the capture trade, however, would MLPs be a good buy-and-hold candidate at the moment? Performance has been atrocious year to date as spreads have narrowed in the face of weakening commodity prices and demand environments. However, these spread businesses are the ultimate mean-reversion trades, as imbalances are self-correcting because supply response is so rapid....148 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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