Master limited partnerships offer upside -Barron's

NEW YORK, April 12 (Reuters) - Energy-focused master limited partnerships are cheap and could offer significant upside while providing juicy yields, Barron's said in its April 13 edition.

MLPs typically invest in energy assets and pass along to investors most of their profits as tax-free distributions, Barron's said.

Pipeline MLPs, which benefit from steady fees for the long-distance delivery of natural gas, are less sensitive to commodity prices than oil and gas exploration and production MLPs. Their hard-to-duplicate assets are a valuable hedge against inflation, Barron's said.

Pipeline partnerships are offering yields of about 10 percent, Barron's said.

MLP shares sold off last fall when hedge funds and Lehman Brothers, a big MLP underwriter, dumped investments, Barron's said. Value investors now are stepping up, says Jerry Swank, who heads a Dallas investment-management firm that oversees about $850 million for institutions and high net-worth individuals.

Swank said he's interested in the most liquid names with strong balance sheets, strong sponsors and stable businesses, namely pipeline and storage in natural gas.

One example is Williams Pipeline Partners LP (WMZ.N: Quote, Profile, Research), a debt-free operator of long-distance gas pipelines in the U.S. West and Northwest.

Another is Energy Transfer Equity LP (ETE.N: Quote, Profile, Research), based in Dallas. It owns the cash-flow-distribution rights to diverse gas-pipeline, storage and processing businesses. (Reporting by Ilaina Jonas; Editing by Leslie Adler)