The Efficiency of Master Limited Partnerships as Investment Vehicles Relative to their Parent Companies

Abstract

This study focuses on the performance of oil and gas MLPs and their parent companies. MLPs are a unique asset class in the investment space due to their unique structure as well as their connection to their sponsor, or parent company. While these companies have a relationship, shares of both companies are separately traded in equity markets. The goal of this study was to analyze how these two asset classes performed comparatively, how various MLPs and their corresponding parent companies performed relative to each other, and whether investors would have been better off investing in MLPs or the C-Corporations. This study will use historical returns, dividend distributions, as well as various statistical and financial metrics to address these questions. This study will examine five MLPs and their five corresponding parent companies, in order to measure performance of the two groups as well as the performance of the individual MLP-parent company "pairs".