Bryan Perry runs the Cash Machine newsletter, looking for high-yielding investments — and recently a lot of those investments have been MLPs or similar equity investments in the oil and gas business. We sleuthed out his “top pick for 2013” back in December and that turned out to be a pretty nice pick so far, up better than 25% with what looks like a continuing yield of about 10%, so what’s his “secret” number one pick this time?
Oh, that one back in December was Niska Gas Storage Partners (NKA), by the way — our article from six months ago is here if you’re curious.
This latest pick of his is in the refining sector, which has yielded quite a few high-income picks of late — particularly as companies have spun off their refining operations to call attention to their solid current profits and “unlock value.”
He’s not the only one sniffing around this sector, of course — Keith Schaefer has been touting the small refiner Northern Tier Energy (NTI) for more than six months as well (that one’s been up and down, but also has a high yield), and there’s been a lot of attention paid to pretty much all refiners over the past (very profitable) year for them that has yielded high-profile refinery spinoffs from Marathon and ConocoPhillips and new (post-crash) highs for old refining standbys like Tesoro (TSO) and Valero (VLO).
With Master Limited Partnerships (MLPs) becoming incredibly popular among investors, the trend has been for companies to spin off partnerships with high income yields and appeal to the yield-starved individual investors who have few other places to turn for current income. And it’s just such a situation that Bryan Perry is teasing … so which one is it?
Here’s a taste from the ad:
“I’ve discovered a brand-new oil refinery partnership, with operations smack dab in the middle of Oklahoma’s new oil industry—and it’s making HUGE amounts of money.
“This small, undiscovered company has the one thing all the big oil producers need: refineries!
“In the short time since it went public in late January, its reported profits of $197 million for the quarter, paid out its first quarterly dividend on May 17 and is projecting an annual yield as high as 21%… and is likely to KEEP that yield for the foreseeable future! …
“This is one of the best opportunities I’ve ever seen in my more than 20 years writing about, and investing in, income investments.
“With Carl Icahn as the largest shareholder in this investment, I’m confident that he will continue to make proactive changes that will benefit shareholders in the months ahead.”
OK, so putting together the newness and the Carl Icahn connection means we needn’t even really drag the Thinkolator out of the garage for this one … but just in case, here are a few more clues:
“Headquartered in Texas, this MLP owns an 115,000 barrel-per-day (BPD) crude oil refinery in Kansas and another 70,000 BPD refinery in Oklahoma.
“Having a refining capacity like that is virtually a license to print money!
“The partnership’s subsidiaries also operate supporting logistics assets including approximately 350 miles of pipelines… more than 125 crude oil transports… a network of strategically located c