How Trump And His Cabinet Will Impact MLPs In 2017

On Friday’s PreMarket Prep, Jim Carroll, managing director and co-portfolio manager at Pointe Capital Management, joined Benzinga to discuss the impact President Donald Trump will have on the firm’s MLP portfolio.

Investors generally believe Trump’s policy approach of lower corporate taxes and deregulation will be good news for most American companies with mostly domestic businesses. However, the oil & gas industry may be particularly well-positioned to capitalize.

“One of Trump’s priorities is to reduce regulatory burdens,” Carroll explained. “In the past 10 years, the regulatory burden on MLP infrastructure development has been substantially increased.”

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Carroll pointed out that Trump’s campaign promises to change that trend seem to be more than just political rhetoric. In his first month in office, Trump has already taken steps to fast-track both the Dakota Access and the Keystone pipelines.

“In addition, and I think this is probably even more important than the regulatory reduction, if you look at some of his key picks for cabinet posts — Rex Tillerson, the former CEO of Exxon, is now secretary of state; Scott Pruitt is the head of the EPA; and Rick Perry, the former governor of the state of Texas, is the energy secretary — this group of three that I mentioned is the most pro-infrastructure development for the U.S. that we have probably seen in at least three or four decades,” Carroll said.

Pointe Capital believes Tillerson, Pruitt and Perry have the power, the experience and the motivation to drive major growth in MLP infrastructure. Carroll believes the full value of Trump’s team is not yet fully priced into the MLP group. Now that Trump’s team is in office, Carroll sees the potential for multiple expansion coinciding with the removal of investor risk.

Since Election Day, shares of the Alerian MLP AMLP ETF are up 8.3 percent.

Listen to the full interview with Carroll at 38:20 in the clip below.

PreMarket Prep is a daily trading ideas show focused on technical analysis and early morning movers.