One of the sources I review each week for MLP intelligence is the MLP Data website. In the most recent issue of their MLP Weekly, they reported that short sellers are adding to their MLP positions. Included was a table of the MLPs with the greatest increase in short interest over the past month:

The article noted that these are mostly MLPs with the greatest commodity price exposure, and those that are expected to issue equity in the current quarter.

I thought it might be of interest to look at the other end of that spectrum. So I ran a screen to come up with a list of the 10 MLPs with the greatest decrease in short sellers’ positions over the past month. Also included in the table are some other financial metrics of interest:

• EV = Enterprise Value in billions as of September 14, 2015
• EBITDA = Trailing 12 months (TTM) earnings in billions before interest, tax, depreciation and amortization
• Debt = Net debt in billions at the end of Q2
• Shares Short = Short percentage of float as of September 14, 2015
• Change = Percent change in the number of shares short over the past month
• YTD = Year-to-date total return
• YLD = Annualized yield based on the most recent quarterly distribution
• CR = Current Ratio (current assets/current liabilities)

Note that Green Plains Partners and CNX Coal Resources both debuted during the year, so some of their metrics are skewed (e.g., EV/EBITDA for GPP).

Year-to-date this group has performed poorly as a result of the weak oil and gas prices that have hit MLPs in nearly every category. The two exceptions on the list are Pope Resources, which is a land and timber owner in the Pacific Northwest, and Rentech Nitrogen Partners, a fertilizer producer that has benefitted from low natural gas prices. The short interest isn’t very high for any of these MLPs, which means investors aren’t expecting much downside from here.

These MLPs come from a range of different categories, and the only pattern seems to be that coal producers are disproportionately represented. Does that mean that investors are betting the sector has bottomed and it may be time to pick up a coal MLP?

While the industry has taken a beating over the past few years, the outlook for coal producers is still dim. The U.S. will remain dependent on coal for many more years, but it is definitely a sunset industry. I prefer to look for winners in sectors with more positive outlooks.

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

Portfolio Update

Energy Transfer Closes in on Williams   

Energy Transfer Equity’s (NYSE: ETE) nine-month pursuit of midstream rival Williams (NYSE: WMB) is close to coming to fruition.

The companies are in advanced talks that could lead to a deal announcement in a week to 10 days, Bloomberg reported yesterday citing sources close to the negotiations, though the same sources warned the merger could still fall through.

The deal would created a midstream titan with an energy pipeline network spanning the continent, and give Energy Transfer greater access to gas production from the Marcellus shale in the Northeast, one of the world’s most prolific and economical basins.

Williams shares rose 5% Wednesday on the report, though they remain down 25% since June 22, the day after Energy Transfer disclosed an all-stock offer for Williams valued then at $64 a share.

It’s not clear if the parties are still discussing the same stock exchange ratio Energy Transfer proposed then, which would imply a lower price for Williams given the subsequent decline in the value of Energy Transfer Equity units.

Continue holding any Williams shares not sold on June 22, when we advised selling half of the position. ETE remains our second-ranked Best Buy below $37.50.   

— Igor Greenwald