Michael R. Wagner, Managing Director and Portfolio Manager at MAI Capital Management, LLC, says that although EQT Midstream Partners LP (EQM) is small compared to others in his portfolio, he has given it a 2.5% weighting in his Vertical Fund. He says he believes EQT is well-positioned and will be a “meaningful grower.”
“This is a play on Marcellus Shale natural gas. It’s increasing its throughput, it’s increasing its volumes, and it’s growing its network — its spider web, if you will — of pipes throughout the Marcellus region,” Wagner says. “Its volumes were up 40% year over year; it released earnings last month as well. Volumes are up, despite the pricing.”
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Wagner says he doesn’t bet on natural gas or commodity prices of crude or West Texas or sour crude. Instead, he is looking for stocks with long-term contracts, and he says EQT fits the bill.
“They are projecting, and we believe based on what we see them doing, that they’re going to have around 15% to 17% distribution growth rate this year, next year, and going forward for that matter, based on the growth of the natural gas in the Marcellus region, and the power plants that are using that natural gas to fire up and produce electricity,” Wagner says. “And so that’s an example of a very small company. VMLPX can give a very small company a meaningful allocation in the portfolio in order to drive performance and drive results.”
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