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Wrong James Murchie?

Mr. James J. Murchie

Founder, Chief Executive Officer and Portfolio Manager

Energy Income Partners LLC

Direct Phone: (203) ***-****       

Email: j***@***.com

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Energy Income Partners LLC

49 Riverside Avenue

Westport, Connecticut 06880

United States

Company Description

Energy Income Partners, LLC manages investments in energy infrastructure such as pipelines, storage and terminals. Investments are publicly traded with a particular focus on Master Limited Partnerships (MLPs) and their affiliates, Yield Corporations (Yiel ... more

Find other employees at this company (15)

Background Information

Employment History

Founder, Portfolio Manager

Lawhill Capital

Managing Director

Tiger Foundation


Sanford C. Bernstein


British Petroleum

President and Treasurer

Oil Analysts Group

Chief Executive Officer

Energy Investment Partners



Board Member
Clark Refining & Marketing Inc.

Board Member
Marketing Company

Recommendation Review Committee
Research Department



History and Anthropology

Rice University


Energy Planning

Harvard University

Web References (17 Total References)

Many MLPs are riskier than you ... [cached]

Many MLPs are riskier than you may believe, so careful selection is critical, says Jim Murchie of Energy Income Partners

MLPs invested in such non-cyclical, fee-for-service businesses, however, represent a small minority of the 120-plus energy-related MLPs, says Jim Murchie, founder of Energy Income Partners (EIP). "What people need to understand is that an MLP is just a structure, a way of financing a business," he says. "It doesn't tell you what kind of business it's operating."
Risk-sensitive, income-seeking investors should consider focusing on MLPs that are more impervious to economic ups and downs, Murchie advises. Blending these in with other high-yielding equities formed as normal, taxable, "C"-corporations will allow such investors "to create a portfolio where the chaos of cyclical businesses is kept outside," he says. Just 20 to 30 of the 120 or so MLPs in the marketplace qualify, he believes--mainly those that own pipelines and related infrastructure.
These MLPs, he says, are protected from competition and essentially permitted to collect tolls from users to move oil, gas and other commodities in good times and bad. As for the others, he dismisses them: "MLPs operating cyclical businesses must either have a low dividend payout ratio, promise only a variable - versus a steady - dividend or someday they will have to cut the dividend."
Investment managers who invest solely in MLPs can get derailed by carrying too much speed through a turn, Murchie says. Instead of sticking with steady infrastructure-related businesses, they own MLPs involved in exploration and production or other endeavors that depend on either strong commodity prices or a strong economy. "Some portfolio managers who are competing with an index think they're doing investors a disservice not to own these high-beta names," he says.
"I try to get investors to view our strategy as old- fashioned utility investing where you have regulated assets that are not sensitive to the economy," Murchie says. "The company puts down $1 billion, and they get a 10%-to- 15% (government allowed) rate of return. So the charge for the service, whether it's electricity, gas transmission, oil transmission or whatever, is $100 million to $150 million--plus the operating cost. EIP likes to own these businesses housed by companies that have high dividend-payout ratios (typically 65% to 95% of earnings), because they view a high payout ratio as a sign of capital-spending discipline.
While it may seem as though the allowed rate of return of such companies limits an investor's return potential to the same 10% to 15%. But Murchie contends that with the right leadership, companies potentially can ascend along a steeper growth trajectory. "If a company can find growth opportunities it can fund with either cash or new securities where the returns on invested capital exceed the cash funding costs (that is, the dividends and interest on newly issued equity and debt)," he says, its shareholder returns can exceed the allowed rate of return on equity.
He says the best management teams are the ones who stay out of trouble, avoiding the dumb mistakes that lower returns. What's more, he says, "eventually, those management teams will take advantage of somebody else's dumb things [and get] above-average returns for their shareholders."
By investing in the well-run, income-generating businesses that he prefers, Murchie says, appropriate investors may be able to capture most of the return potential of a pure MLP portfolio in boom years while avoiding a lot of the downside during in bad years. Indeed, the success of the energy MLPs since the mid-1990s has been driven by MLPs invested in non-cyclical infrastructure businesses. The vast majority of MLPs in the 1980s, which were mostly oil and gas producers, were train wrecks when oil prices declined in 1986.
Likewise, Murchie says, the best performing gas and power utilities since the mid-1990s have been those that avoided getting into such cyclical businesses as merchant power generation and energy trading. Both groups have similar long-term shareholder returns. It's why EIP sees itself as a conservative investor in utility-type businesses, Murchie says, and why it doesn't have "an MLP mandate."

Jim Murchie CEO, Energy ... [cached]

Jim Murchie CEO, Energy Income Partners LLC

Many MLPs are riskier than you ... [cached]

Many MLPs are riskier than you may believe, so careful selection is critical, says Jim Murchie of Energy Income Partners

09-27-2012 Opportunities in Energy Infrastructure - CFA Society of Los Angeles [cached]

Speaker: James J. Murchie Energy Income Partners, LLC

In this presentation, James J. Murchie will discuss the following:
James Murchie founded EIP in 2003 and is the portfolio manager for all of its funds, which focus on energy-related master limited partnerships, income trusts and similar securities. From 2005 to mid-2006, Mr. Murchie and the EIP investment team were affiliated with Pequot Capital Management. In July 2006, EIP re-established its independence. Previously, Mr. Murchie managed a long/short equity fund that invested in energy and cyclical equities as well as commodities, as head of Lawhill Capital. He was also a managing director at Tiger Management where his primary responsibility was investments in energy, commodities and related equities. Mr. Murchie was also a principal at Sanford C. Bernstein where he was a top-ranked energy analyst and sat on the Research Department's Recommendation Review Committee. Before joining Bernstein, Mr. Murchie spent 8 years at British Petroleum.
Mr. Murchie has served on the board of Clark Refining and Marketing Company and as President and Treasurer of the Oil Analysts Group of New York. Mr. Murchie holds a BA in History and Anthropology from Rice University and an MA in Energy Planning from Harvard University.

Top Executives from Shell E&P, Continental Resources, Apache Corporation and Kohlberg Kravis Roberts and Company to Speak at IHS Herold Pacesetters Energy Conference 2010 | IHS Online Pressroom [cached]

ยท James Murchie, chief executive officer, Energy Income Partners LLC

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