An informative article about how to approach Master Limited Partnerships and their role in a portfolio are outlined. Helen Kearney went a lot deeper than your average journalist looking for a quick turn story. We spent a decent amount of time going over the history, use, and issues. If you see here name on other articles, stop and read them. The whole story is here.
Lee Munson, an adviser at Albuquerque, New Mexico-based Portfolio LLC, said MLPs are the “secret sauce” of his clients’ portfolios and he invests around 10 to 25 percent of an average portfolio in the assets. But he also preaches caution. “Everyone is talking about them but this is a tiny market and it’s misunderstood,” he said. Munson recommends sticking to large cap offerings as smaller partnerships can be volatile and are more likely to cut their distributions.
Lee Munson and Charles R. Major provide independent fund research on Oppenheimer Rochester National Muni A (ORNAX ).
During the 2008 crash, Oppenheimer Rochester National Muni A (ORNAX ) lost over 50% of its worth. It was one of the very worst performers. Before that it had been one of the best. Investors were clearly not expecting that type of drawdown that fast. In an article our firm wrote near the end of 2008, we discussed the oft-misunderstood tobacco revenue bonds, which made up a substantial portion of ORNAX’s bond purchases. The uncertainty of these bonds, coupled with investors’ general misunderstanding of them, led them to be mispriced and under-appreciated. These bonds are still mispriced and under-appreciated today. And they still make up the largest of ORNAX’s holdings, at around 22%. However, when we recently looked under ORNAX’s hood, we found something more interesting. Management has decided on a philosophy that could lead them to enter the property management business, a move that should concern any investor.
Lee’s article originally appeared in the New Mexico Business Weekly. It was so well received that it has now been printed in the Orlando Business Journal, where it is no longer behind a subscription wall.
