Once again today we take a gander at an MLP teaser — this time for the aptly named MLP Profits newsletter ($399, just FYI), with the ad coming in over the signature of Roger Conrad, one of the letter’s editors (Elliott Gue is the other).

And the promise is lusty, as always:

“You may need a bigger mailbox to handle stacks of envelopes stuffed with five-figure distribution checks!

“Short of having a money-printing press down in your basement, investing in publicly traded MLPs is the fastest, safest, tax-free way to grow your money! Start receiving big checks in the mail. Just like clockwork. Every single quarter!”

Just as an aside, I may need a bigger mailbox, too — but it’s not because the checks are so huge (much as I appreciate them), it’s because Gumshoe Manor sits atop a hilly driveway and the local Post Office functionary has determined that he can’t possibly trust his driver to get our packages to the door and somehow navigate the driveway going both up and down. Interestingly enough, UPS and FedEx have no trouble dropping our boxes on the front stoop, which probably tells you only what you already know about the customer service of entrenched bureaucracies.

Anyway, this teaser appealed to me because it was a nice story, and because I know there are lots of yield-focused folks out there in the great armies of Gumshoedom who are interested in ways to spruce up an income flow that’s laboring under ridiculously low interest rates … a need that MLPs often seem designed specifically to address.

If you’re not familiar with Master Limited Partnerships (MLPs), you can probably think of them as something akin to a Real Estate Investment Trust, a pass-through vehicle that allows unitholders (not technically shareholders, since these aren’t corporations) to receive all of the partnership’s income before taxes. They’re a little more complicated than REITs, however, in that they have more confusing filing and taxation rules and they are effectively as much prized for being tax-deferral investments as income investments. That’s because most of the distributions churned out to unitholders of most MLPs are not actually “income” in the strict accounting sense of that word, they’re “cash flow” generated by the business but offset by non-cash expenses like depreciation, so they are treated as return of capital and you don’t owe the tax on it until you sell your units (since the capital is returned, it lowers your cost basis on the units you own) — almost all MLPs pay out far more in distributions than they actually book in income.

I’ve written about this sector many times, so I won’t bore you with more details (ask away in the comments if you have questions, many longtime Gumshoe readers are very experienced MLP owners), other than to tell you that almost all MLPs are in the energy distribution business (pipelines, propane distributors, etc.).

Today’s, however, is different. Here’s how Conrad describes it, after he goes through the story of Aristotle Onassis and the wealth generated by that Greek shipping tycoon and calls the head of our teased company a “Greek Goddess” who might be the next Onassis:

“This beautiful, brilliant superwoman is building what many believe will ultimately be the greatest shipping company in the history of the world.

“The scion of a famous Greek shipping family could see that times were changing. So in 2004, she left her family’s shipping business, set up her own company, raised three-quarters of a billion dollars from banks and investors, and went on a shopping spree for a big fleet of ocean-going cargo ships.

“She acquired one of the oldest and most venerable names in shipping business. This future 40-bagger has existed since the 1950s, when it was the ocean-going shipping arm of U.S. Steel.

“The company is a bulk shipper based out of Greece, running shipments all over the globe. It services the European, Asian and North and South American coasts.”

And we get a little bit more by way of detail about the company …

“The company has a fleet of young and diversified vessels. It boasts an average time of just a bit over 5 years on the open water, minimizing maintenance costs and dock time for repairs.

“With long-term contracts locked in at certain rates, consistent earnings can be expected. The company also has the advantage of booking short-term contracts to ultimately capitalize on real-time fluctuations in bulk shipping rates.”

So … new fleet, and long-term contracts (as opposed to spot rate charters that are more volatile, reflecting ups and downs in the business more quickly).

And, of course, being MLP Profits they probably didn’t have to say this … but:

“This Greek Goddess has structured her shipping company as a publicly traded Master Limited Partnership on the NYSE.”

And remember what I said about high cash flow and depreciation? Apparently ships are just as suited to this as pipelines, per Conrad:

“The shipping business is well suited for Master Limited Partnerships. Operating a tanker or dry-bulk ship with a term contract is much like running a pipeline—the operator faces a large up-front capital outlay to build the ship, but what follows is years of steady, guaranteed cash flows.

“Better still, tanker ships offer a steady stream of depreciation charges that can be passed through to MLP unit-holders. That means regularly scheduled returns of hefty capital payments and lower taxes.”

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But then Conrad gets into some aspects of the tease that were, frankly, a bit eye-opening for me — this is stuff I hadn’t heard before, and part of the reason I wanted to look into this one for you today:

“The real advantage here is that this particular MLP doesn’t report distributions on a Schedule K-1, unlike most other partnerships. Instead, the company reports on a standard Form 1099, just like any other company taxed as a corporation.

“In addition, this MLP doesn’t generate unrelated business taxable income (UBTI) and is therefore suitable for an IRA or 401(k) account. And this is critically important for investors.”

The ad says that they escape this K-1 hassle (the bane of MLP investors — that’s the partnership income form that you have to use to file your taxes, and they’re almost always late … and different, which gives some investors headaches) because they’ve elected to be taxed as a corporation but are really a MLP. No, I don’t know how this works, something about being a foreign company with no US assets.

And we’re also told that this shipping firm’s long-term contracts (none expiring soon, and no spot rate exposure) are insured by an EU government body of some kind, eliminating the risk that their charters could fall through. And the MLP’s own General Partner has the maintenance contract.

So that actually sounds pretty compelling, right? I thought so too. So I threw all that info into the mighty, mighty Thinkolator and discovered that this must be:

Navios Maritime Partners (NMM)

You may well have heard of Navios Maritime (NM), the parent company that also owns the General Partner of the MLP — they’ve been a publicly traded dry bulk shipper for many years (and do have roots in the old shipping arm of US Steel that brought iron ore up from Brazil, among other things), though this MLP offshoot that owns about a dozen vessels (mostly Panamax dry bulkers, though they have a few of the larger Capesize vessels and one smaller Handymax) on long term contracts is only about three years old (their next charter expiration is about two years off, just FYI). The partnership has done far better than the parent since the split, with less volatility.

And the woman behind this little dry bulk empire is Angeliki Frangou — beauty is subjective and clearly only one small part of Goddess-hood, but if you wish to evaluate that claim here’s a pic of her in an old Tradewinds article. More importantly, you can see the basics of her story, and how she built the company, in the Forbes profile here.

Navios, like many of the dry bulkers, was hit hard by the collapse of that business and the collapse of the financial system — most shippers are highly leveraged companies that rely on constant access to debt to finance their pricey vessels.

And yes, they will send you a 1099-DIV instead of a K-1, which I know would make some of my readers happy. At least, that’s what they say on their tax info from last year. I have no idea what the tax implications of that are, though that link implies that these might be “qualified” dividends for that (maybe soon to end) lower tax rate on dividends.

I don’t know much more about Navios Maritime Partners than that, they do pay a nice dividend that comes in at about an 8% yield right now — that used to be low for a dry bulk shipper, but the big name players like Eagle Bulk (EGLE), DryShips (DRYS), Diana Shipping (DSX) and several others all suspended their dramatically high dividends back in 2008 when their business went to heck.

I did not check into the bit about their charters being insured, I don’t know much about the current state of the shipping biz, and I don’t know where dry bulk rates are going (they have to renew a few charters every year starting in 2012, so they’ll need rates to be stable or rising by then), but I will admit that this one caught my eye and I’m a bit interested, despite the fact that I’ve been shy about the dry bulk shipping business for many years. There could easily be some skeletons in there that I haven’t read about yet, so if you’re familiar with Navios Maritime Partners (or anything else that might be relevant) and want to share an opinion please do so in the handy little box below.