We can’t turn the page on 2013 without toasting a great year for MLP Profits. It helped, of course, that master limited partnerships on the whole did well, with the Alerian MLP Index advancing 20.5 percent for the year and its indicative dividend yield pushing the group’s total return above 26 percent.

But it also helped a lot that our recommendations, on the whole, performed much better than those averages. As shown in the table below, the 17 picks that stayed in our portfolios throughout the year returned an impressive 39.7 percent as a group including distributions. No recommendation in the portfolio for the entire year showed a loss, and only one gained less than 19 percent.

Going the Distance


But of course we also added new recommendations in the course of the year. All but one of these were made starting in June after a change in the newsletter’s management. Here’s how those picks worked out:

New Kids on the Block

The 12.6 percent certainly doesn’t sound as impressive as the 40 percent on the 2012 holdovers we didn’t sell. But note that the average holding period for this group was less than four months, so that the annualized rate of return was in fact close to 38 percent. This despite the fact that the Alerian advanced just 3.2 percent between June 7, when the first of these picks was made, and the end of the year. So during a seven-month stretch when the MLP rally essentially stalled we produced returns every bit as good as the entire sector saw during its banner spring, on 13 new recommendations that clearly outperformed by a long shot. That’s a record we’d proudly stack up against anyone’s.   

Of course, a few mostly longtime holdings didn’t perform as well, and all of these ended up among the half-dozen names sold in the course of the year. They’re listed below with 2013 returns prior to the sale and after the sale. Also shown are their returns in the 30 calendar days after the sale, to illustrate the near-term risks we sought to sidestep.

Fly Like a Beagle

In hindsight, it would have certainly paid to know that the SEC “probe” of Linn Energy (Nasdaq: LINE) that caused us to dump that problem child closer to the lows than we would have liked was mostly an exercise in backside covering. PVR Partners (NYSE: PVR) also came back to bite us after garnering a buyout offer soon after we bailed out. But even so, the average total return since the sale for this group has barely been positive, while the first month after we hopped off was just plain ugly, in the aggregate.

In sum, we replaced the six worst portfolio laggards, which have continued to underperform since, with a baker’s dozen of strong overachievers.

And on the whole our portfolio beat the MLP benchmark by some 50 percent. We’re only sorry to confess that this involved an unsustainably large helping of good fortune.

All the more reason to take pride in the fact that we helped new subscribers strike while the iron was hot.  

We not only defended Navios Maritime (NYSE: NMM) against suggestions that the dividend was in danger, but upgraded it to a Buy in September and raised the price target last month to encourage additional accumulation. The unit price rewarded those decisions by rallying 33 percent since the upgrade and 15 percent over the last six weeks.

Energy Transfer Equity (NYSE: ETE) has returned 44 percent since it was recommended seven months ago, and we aided position building by raising the price target twice since.

Magellan Midstream Partners (NYSE: MMP) is up 15 percent since our Aug. 12 upgrade to Buy.  Meanwhile, Crestwood Midstream (NYSE: CMLP) has rebounded 20 percent since we argued on Dec. 10 that the selling has been overdone.

Future markets may prove less friendly. In fact, as we argue up front in this issue, they almost certainly will be less kind over the medium term. But the past year’s showing should build confidence that our approach will help preserve capital in a variety of market environments. And capital that’s been preserved can grow quickly when the timing’s right, as it clearly was in 2013.