Transportation and pipeline companies!
BLISTERING RALLY
The Alerian MLP index (.AMZ), which tracks a number of pipeline firms including Magellan, Enterprise, Energy Transfer Partners and Plains All American Pipeline LP (PAA.N), has risen more than 17 percent since Trump's election, including a 6 percent rally this week to the highest level since November 2015.
The pipeline sector has outperformed both oil and gas producers (.SPLRCOILP) and the S&P 500 index (.SPX), which have risen about 13 percent and 7.5 percent, respectively, since the U.S. election.
"You don't have to take a lot of risk in the MLP space at this point to make outsized returns ... so it's an interesting time and a unique opportunity in the MLP space," said Matt Sallee, a portfolio manager at Tortoise Capital.
The Alerian index rose 9 percent in 2016 as oil prices rose, OPEC and non-OPEC exporters announced supply cuts, and on Trump's election. That came after a crash of more than a third in 2015.
Mutual and exchange traded funds' investment in MLPs crashed to $3.8 billion in 2015 before recovering to about $6.2 billion last year, according to Morningstar.
The revival in U.S. shale activity sparked by the recovery in oil prices has also given pipeline companies a boost and opened the way to further development. Significant challenges remain - activists plan to take their fight to the courts on a state-by-state basis, which could bog down future developments.
But for now, investors see room for the value of pipeline firms to go higher.
"We think drilling is going to expand in the U.S. and will need plenty of new infrastructure, particularly in the Permian Basin," said Jay Hatfield, portfolio manager of the InfraCap MLP ETF. MLPs were around 60 percent undervalued compared with BBB bonds which usually fetch the same yield, he added.
Already, pipeline companies such as Plains All American have announced large deals and expansions in the Permian, the biggest shale play in the United States.
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