Published On: October 27, 2015

The Associated Press wrote an article today entitled “New Way to Bet on Oil Wipes out Billions in Investor Savings” in which a Stoltmann Law Offices customer, Karen Robinson, was featured. Robinson invested in oil, shale and energy investments at the urging of her broker, Tom Parks of Ameriprise Financial Services in Stephenville, Texas. Two years later, Robinson’s oil partnerships have plummeted in value and she has lost more than half of the $202,000 she invested.

In the past year alone, investors have lost $20 billion in publicly traded drilling partnerships (or $8 out of every $10 invested, according to a report prepared for the The Associated Press.) $37 billion in bond losses sold by the partnerships has also occurred since 2010. This comes after the plunge in the price of oil, coupled with the partnerships borrowing heavily and running big risks, even when the price of oil was higher one year ago. Oil and gas products have always been high-risk investments and are not for those investors who wanted to preserve capital. Many of these partnerships are classified as “junk” bonds, high-yield, high-risk securities, typically issued by a company seeking to raise capital quickly, because they are from volatile emerging markets or highly indebted U.S. companies. Subsequently, because of the high volatility, investors are pulling out of junk funds and emerging market bond funds, quickly, to the tune of $4 billion each.

Master limited partnerships, such as the energy partnerships, are types of limited partnerships that are publicly traded, with two types of partners. The limited partner is the person or group that provides the capital to the partnership and receives periodic income distributions from its cash flow, and the general partner receives compensation that is linked to the performance of the venture. They also avoid corporate taxes by passing off much of what they earn straight to their investors. But many energy stocks, BreitBurn included, tumbled by 85%, and cut payments to investors in half. As quoted by Andrew Stoltmann in the article: “It’s a little like a death spiral. When the bad news inevitably hits, they don’t have a cash cushion.”

Some of the MLPs being investigated are:

Advisory Research MLP & Energy Infrastructure Fund (MLPPX)

Oppenheimer SteelPath MLP Select 40 Fund (MLPFX)

Advisory Research MLP & Energy Income Fund (INFRX)

Oppenheimer SteelPath MLP Alpha Fund (MLPAX)

Oppenheimer SteelPath MLP Income Fund (MLPDX)

Advisory Research MLP & Equity Fund (INFJX)

ALPS/Alerian MLP Infrastructure Index Fund (ALERX)

BP Capital TwinLine MLP Fund (BPMAX)

Catalyst MLP & Infrastructure Fund (MLXAX)

Center Coast MLP Focus Fund (CCCAX)

ClearBridge Energy MLP & Infrastructure Fund Inc. (MLOAX)

Cohen & Steers MLP & Energy Opportunity Fund (MLOAX)

Deutsche MLP & Energy Infrastructure Fund (DMPAX)

Dreyfus MLP Fund (DMFAX)

Eagle MLP Strategy Fund (EGLAX)

Goldman Sachs MLP Energy Infrastructure Fund (GLPAX)

Highland Energy MLP Fund (HEFAX)

Ivesco MLP Fund (ILPAX)

James Alpha Yorkville MLP Portfolio (JAMLX)

MAI Energy Infrastructure and MLP Fund (VMLIX)

MainGate MLP Fund (AMLPX)

MainStay Cushing MLP Premier Fund (CSHAX)

Oppenheimer SteelPathMLP Alpha Plus Fund (MLPLX)

Prudential Jennison MLP Fund (PRPAX)

Salient MLP & Energy Infrastructure Fund II (SMAPX)

Salient MLP Fund (SAMCX)

Spirit of America Energy Fund (SOAEX)

Tortoise MLP & Pipeline Fund (TORIX)

Transamerica MLP & Energy Income (TMLAX)

Virtus Select MLP and Energy Fund (VLPAX)

Westwood MLP and Strategic Energy Fund (WMLPX)

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