Wunderlich Recommends Buying Dips For MLP Groups

Wunderlich Securities recommended buying any dipping shares in master limited partnership (MLP) groups, after President Barack Obama's tax reform panel submitted their recommendations. Among the options listed in the report were ones eliminating tax exemptions for MLP groups, but Wunderlich cites a variety of reasons for sticking with these natural resource-producing arrangements. It argues that there appears to be a lack of political capital investment in cutting the exemptions, including among members of Congress; an expansion of qualifying income to include biofuels and carbon dioxide suggesting a different trend, and the key role of MLPs in the natural gas supply chain. However, they caution investors to be vigilant for any warnings signs for a potential change to the tax code that could reduce distributable cash flow to unitholders.