A good publication isn’t a one-way information street; it’s a forum where writers as well as readers can learn from each other. This has certainly been my experience at MLP Profits, which is fortunate to have so many knowledgeable, thoughtful and active subscribers.

One of the new recommendations featured in Best Buys this month is a great example of such collaboration. Holly Energy Partners (NYSE: HEP) was first suggested in last month’s subscriber chat, and wherever you are, John, thank you. Robert Rapier then drilled into HEP’s operations and recent results for a recent issue of MLP Investing Insider. All that was left for me to do was to place the value proposition in the context of the market and the recent trading action.  

This month’s other portfolio addition, SemGroup (NYSE: SEMG) is a name with a checkered past but a bright future as the conservatively managed GP of a fast-growing crude gathering and shipping master limited partnership. It fits with our theme of recommending fundamentally strong businesses rather than chasing yield or growth metrics, and with our preference for general partners harvesting incentive fees.

The Sector Spotlight delves into closed-end MLP funds, and is also the product of reader feedback. We continue to believe that most MLP funds provide marginal benefits to a diversified portfolio made up of partnership units and the shares of MLP sponsors. But a few closed-end funds have retained discounts to net asset value wide enough to spark our interest, and we found a couple that look tax efficient as well as inexpensive. These are not being put forward as portfolio picks, but rather as ideas for readers interested in MLP funds.

Our own portfolios continue to outperform, as can be gleaned from the many upbeat entries in Portfolio Update. The downside is that many of our top picks have blown right past their buy maximums. In part, that will be addressed in next month’s issue, which will update our Best Buys list from March with some new blood and new price targets.

But this is an opportune time to discuss why a Best Buy could clear its buy limit and get neither a new one nor a downgrade to Hold. Downgrades to a Hold are typically reserved for cases of concern about the fundamental outlook for an investment. In contrast, a Buy target well below the current price indicates that the fundamental case remains strong but the time isn’t right for investing additional capital. 

Over the longer term, either the price target will rise or the rating will fall. Expect target raises next month on some of the updated Best Buys, but not rote increases on all the picks that have exceeded our short-term expectations.

Also, be aware that the IRS could soon wrap up its review of recent rulings it has issued dramatically expanding the scope of activities qualifying for the partnership tax treatment. We don’t expect the status of most MLPs to be affected in any way, but the news could introduce some volatility back into the sector, especially for unconventional MLPs sitting on huge gains. More on this in this month’s In Focus.

For the moment though, neither the bears nor the IRS look like serious threats to two decades of impressive market outperformance by MLPs. And so long as domestic oil and gas production keeps accelerating against the backdrop of high global energy demand and rising prices, there is no reason to the trend can’t keep working in our favor.

Finally, thank you for keeping us on our toes enough to take second place honors in the Best Investing Newsletter category in the juried competition sponsored by the Specialized Information Publishers Association (SIPA). We finished behind our sister publication Personal Finance, which made it even sweeter, and we couldn’t have done it without you.