HOUSTON, April 7,
2022 /PRNewswire/ -- Salient Midstream & MLP Fund
(the "Fund") (NYSE: SMM) provided today a summary of unaudited
statement of assets and liabilities and announced Net Asset Value
(NAV) as of March 31, 2022.
On March 31, 2022, the Fund's
total assets were $234.1 million and
the NAV per share was $9.52. On
March 31, 2022 the closing share
price of the Fund was $8.24, which
was trading at a 13.4% discount to the NAV.1 The Fund's
NAV and market price total returns for the month of March were
10.1% and 11.9%, respectively, compared to 7.4% for the Alerian
Midstream Energy Select Total Return Index (AMEIX).2 The
Fund's NAV and market price total returns year-to-date (YTD) were
28.8% and 23.7%, respectively, compared to 21.5% for the
AMEIX.2
While we continue to consider various alternatives to enhance
shareholder value, we believe the most effective strategy to
improve the discount is to generate top quartile total returns
relative to our peer group of leveraged regulated investment
company (RIC) and C-Corp closed-end funds and to pay an attractive
and growing cash distribution to investors.3 Over the
last 12 months, SMM has increased its distribution by 46% and
management plans to review the distribution rate every six months
with expectations to continue passing through distribution
increases as the Fund's portfolio has distribution increases.
Since the Fund's inception, the portfolio management team has
focused on generating top-tier total returns rather than focusing
on maximizing distributions. The Fund's performance over multiple
time periods versus its peers is provided in the table below along
with a ranking of SMM vs. peers.
|
|
|
Market Price
|
|
NAV
|
Name
|
Distribution
Rate
|
Premium/
Discount
|
YTD
|
1 Year
|
3 Year
Annualized
|
5 Year
Annualized
|
7 Year
Annualized
|
Since
Inception
Annualized
|
Rank
|
YTD
|
1 Year
|
3 Year
Annualized
|
5 Year
Annualized
|
7 Year
Annualized
|
Since
Inception
Annualized
|
Rank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salient Midstream
&
MLP Fund
|
4.2%
|
-13.4%
|
23.7%
|
69.1%
|
2.8%
|
-2.6%
|
-5.7%
|
-1.7%
|
2
|
28.8%
|
47.8%
|
2.2%
|
-1.7%
|
-6.7%
|
-0.2%
|
3
|
Manager A
|
8.0%
|
-15.8%
|
31.3%
|
52.2%
|
-16.2%
|
-12.6%
|
-10.7%
|
-4.3%
|
8
|
23.9%
|
42.6%
|
-15.9%
|
-12.3%
|
-11.1%
|
-3.6%
|
9
|
Manager B
|
7.5%
|
-19.1%
|
21.5%
|
36.2%
|
-3.5%
|
-4.8%
|
-9.3%
|
-2.9%
|
4
|
20.2%
|
38.0%
|
-2.6%
|
-3.5%
|
-8.8%
|
-2.2%
|
7
|
Average Excluding SMM
|
7.8%
|
-17.4%
|
26.4%
|
44.2%
|
-9.9%
|
-8.7%
|
-10.0%
|
-3.6%
|
|
22.1%
|
40.3%
|
-9.2%
|
-7.9%
|
-9.9%
|
-2.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manager C
|
7.1%
|
-17.9%
|
27.3%
|
54.6%
|
-11.0%
|
-8.3%
|
-8.9%
|
-3.4%
|
5
|
29.2%
|
61.2%
|
-9.0%
|
-6.3%
|
-8.1%
|
-1.7%
|
4
|
Manager D
|
7.1%
|
-19.6%
|
31.1%
|
61.6%
|
-8.3%
|
-7.2%
|
-8.5%
|
-3.4%
|
6
|
28.7%
|
62.0%
|
-7.1%
|
-5.8%
|
-8.1%
|
-2.0%
|
5
|
Manager E
|
3.8%
|
-22.0%
|
24.0%
|
59.2%
|
-0.5%
|
-2.1%
|
-6.4%
|
--
|
-
|
28.0%
|
58.5%
|
2.4%
|
-0.1%
|
-4.7%
|
--
|
-
|
Manager F
|
7.1%
|
-20.4%
|
25.2%
|
56.0%
|
-7.3%
|
-7.1%
|
-7.7%
|
-4.0%
|
7
|
26.8%
|
59.7%
|
-5.6%
|
-5.4%
|
-7.1%
|
-2.0%
|
6
|
Manager G
|
8.1%
|
-17.3%
|
27.4%
|
57.9%
|
-29.8%
|
-21.5%
|
-15.5%
|
-9.9%
|
11
|
24.8%
|
46.7%
|
-27.9%
|
-18.7%
|
-14.9%
|
-8.2%
|
11
|
Manager H
|
8.7%
|
-14.9%
|
21.0%
|
37.0%
|
-8.5%
|
-6.5%
|
-8.7%
|
-2.5%
|
3
|
21.8%
|
40.5%
|
-7.4%
|
-3.7%
|
-5.5%
|
-0.1%
|
2
|
Manager I
|
5.8%
|
-21.1%
|
19.1%
|
32.6%
|
-31.5%
|
-23.1%
|
-20.9%
|
--
|
-
|
19.6%
|
38.2%
|
-29.0%
|
-21.1%
|
-18.2%
|
--
|
-
|
Manager J
|
8.2%
|
-17.2%
|
26.8%
|
51.0%
|
-22.5%
|
-17.7%
|
-13.2%
|
-7.2%
|
10
|
19.5%
|
40.3%
|
-19.4%
|
-12.9%
|
-11.7%
|
-4.1%
|
10
|
Manger K
|
5.2%
|
-15.6%
|
30.4%
|
69.6%
|
-31.7%
|
-22.7%
|
-18.2%
|
--
|
-
|
18.7%
|
43.8%
|
-28.9%
|
-20.7%
|
-17.4%
|
--
|
-
|
Manager L
|
7.1%
|
-13.2%
|
17.6%
|
28.0%
|
-2.8%
|
-5.0%
|
-4.2%
|
--
|
-
|
17.9%
|
32.0%
|
-2.6%
|
-3.0%
|
-4.3%
|
--
|
-
|
Manger M
|
5.2%
|
-18.7%
|
15.8%
|
47.1%
|
2.6%
|
-0.5%
|
-3.2%
|
-6.4%
|
9
|
17.3%
|
37.1%
|
3.6%
|
-0.6%
|
-3.7%
|
-2.2%
|
8
|
Manager N
|
7.4%
|
1.0%
|
19.8%
|
31.7%
|
1.0%
|
0.2%
|
-0.8%
|
2.9%
|
1
|
15.3%
|
27.0%
|
-0.8%
|
0.3%
|
-1.7%
|
3.3%
|
1
|
Average C-Corp
|
6.7%
|
-16.4%
|
23.8%
|
48.9%
|
-12.5%
|
-10.1%
|
-9.7%
|
-4.2%
|
|
22.3%
|
45.6%
|
-11.0%
|
-8.2%
|
-8.8%
|
-2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEF Universe Average
|
6.7%
|
-16.4%
|
24.1%
|
49.6%
|
-11.2%
|
-9.4%
|
-9.5%
|
-3.9%
|
|
22.7%
|
44.9%
|
-9.9%
|
-7.8%
|
-8.8%
|
-2.1%
|
|
Source: Salient Capital
Advisors, LLC, March 31, 2022. For illustrative purposes only. Past
performance is not indicative of future results. No
investment strategy can guarantee performance results. All
investments are subject to investment risk, including loss of
principal invested.
|
|
Since inception in 2012 SMM is the second best performing
closed-end fund on market price and the third best on NAV in the
peer group of eleven funds.
SMM's inception to date (ITD) annualized total return (based on
market price) of -1.7% has outperformed the RIC Average of -3.6%
and C-Corp average of -4.2%. Likewise, on a NAV basis, SMM's ITD
return of -0.2% compares favorably to the -2.9% return for the peer
group of RIC Funds and -2.1% for C-Corp Funds.
March Market Commentary
March was a solid month for energy infrastructure equities as
measured by the AMEIX. Crude oil prices catapulted higher early in
the month with energy equities following suit. A small correction
mid-month saw equity gains evaporate only to see a rebound into
month end. The AMEIX returned 7.4% for the month and was up 21.5%
for the first quarter of 2022.2 For the remainder of
2022, we remain positive on the industry as 1) free cash flow after
distributions is poised to increase year-over-year for the
industry, 2) hydrocarbon volumes should grow as drilling activity
improves and 3) capital allocation remains focused on reducing debt
and returning excess cash to investors through buybacks and
potential distribution increases.4
Crude oil as measured by the West Texas Intermediate (WTI)
benchmark was up 10.1% for the month of March and is up 44.7% for
the first quarter of the year.5 Crude oil prices have
moved sharply higher due to the war in Ukraine. Russia produces ~10 million barrels per day
(mmbbls/d) of crude oil, or about 10% of global supply and is the
second largest crude oil exporter after Saudi Arabia.6 Markets are worried
that crude oil supplies may be disrupted which could lead to a
spike in prices well above current levels. While sanctions so far
have avoided Russian crude oil, sanctioning Russia's energy exports would likely lead to a
further spike in global crude oil and natural gas prices. Even if
crude oil sanctions are not implemented, we would expect a
geopolitical risk premium to remain in crude oil prices for the
near future. Should things normalize, we view crude oil prices in
the $70-$80 per barrel range as being positive for
long-term investment in the American energy industry. While the
Ukrainian war will have an as yet unknown effect on crude oil
supply, fundamentals remain robust as the global economy continues
to reopen post COVID-19. Commodity analysts continue to see a tight
supply environment for both crude oil and natural gas in 2022 as
energy demand appears to be on trend to exceed peak pre-COVID-19
demand.7 We believe that current prices are sufficient
to lead to U.S. volume growth in 2022, with increases in production
already showing up in recent Energy Information Administration
(EIA) data. The promise of these incremental volumes should be
supportive of midstream companies.
The Fund's Top 10
holdings as of March 31, 2022 are shown
below:8
|
|
|
No.
|
Symbol
|
Name
|
Country
|
Asset
Type
|
% of Gross
Assets
|
1
|
ET
|
Energy Transfer,
L.P.
|
United
States
|
MLP
|
9.3%
|
2
|
TRGP
|
Targa Resources
Corp.
|
United
States
|
C-Corp
|
8.0%
|
3
|
LNG
|
Cheniere Energy
Inc.
|
United
States
|
C-Corp
|
6.5%
|
4
|
-
|
EMG Utica | Offshore
Co-Investment LP
|
United
States
|
C-Corp
|
6.0%
|
5
|
ENB
|
Enbridge
Inc.
|
Canada
|
C-Corp
|
5.9%
|
6
|
PPL CN
|
Pembina Pipeline
Corp.
|
United
States
|
C-Corp
|
5.5%
|
7
|
MPLX
|
MPLX, L.P.
|
United
States
|
MLP
|
5.4%
|
8
|
OKE
|
ONEOK Inc.
|
United
States
|
C-Corp
|
4.9%
|
9
|
WMB
|
The Williams Companies
Inc.
|
United
States
|
C-Corp
|
4.7%
|
10
|
PAGP
|
Plains GP Holdings,
L.P.
|
Canada
|
C-Corp
|
4.5%
|
|
|
|
|
|
60.5%
|
For illustrative
purposes only. Current and future holdings are subject to change
and risk. Figures are based on the Fund's gross assets
ex-cash. Source: Salient Capital Advisors, LLC, March 31,
2022.
|
The Fund's unaudited
balance sheet as of March 31, 2022 is shown
below:
|
|
|
Salient Midstream
& MLP Fund
|
Balance
Sheet
|
March 31,
2022
|
(Unaudited)
|
|
|
Assets
|
(in
millions)
|
Investments
|
$228.6
|
Other Assets
|
2.4
|
Cash and Cash
Equivalents
|
3.1
|
Total Assets
|
$234.1
|
|
|
Liabilities
|
|
Line of Credit
Payable
|
$60.0
|
Securities of Purchased
Payable
|
4.8
|
Other
Liabilities
|
0.5
|
Total
Liabilities
|
$65.3
|
Net
Assets
|
$168.8
|
|
|
The Fund had 17.7
million common shares outstanding as of March 31, 2022.
|
Past performance is not
indicative of future results.
|
Salient Midstream & MLP Fund is a Delaware statutory trust registered as a
non-diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment
objective is to provide a high level of total return with an
emphasis on making quarterly cash distributions to its common
shareholders. The Fund seeks to achieve that objective by investing
at least 80% of its total assets in securities of MLPs and
midstream companies. There can be no assurance that the Fund will
achieve its investment objective.
This press release contains "forward-looking statements" as
defined under the U.S. federal securities laws. Generally, the
words "believe," "expect," "intend," "estimate," "anticipate,"
"project," "will," and similar expressions identify forward-looking
statements, which generally are not historical in nature.
Forward-looking statements are subject to certain risks and
uncertainties that could cause actual future results to differ
significantly from the Fund's present expectations or projections
indicated in any forward-looking statements. These risks include,
but are not limited to, changes in economic and political
conditions; regulatory and legal changes; leverage risk; valuation
risk; interest rate risk; tax risk; the volume of sales and
purchase of shares; the continuation of investment advisory,
administration and other service arrangements; and other risks
discussed in the Fund's filings with the Securities and Exchange
Commission. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. The Fund
undertakes no obligation to publicly update or revise any
forward-looking statements made herein. There is no assurance that
the Fund's investment objective will be attained.
About Salient
Salient Partners, L.P. ("Salient") is a
real asset and alternative investment firm that offers a suite of
strategies focused on energy and infrastructure, real estate and
tactical alternative investments. Institutions and investment
advisors turn to Salient to build smarter, more efficient
portfolios. Strategies are offered in the form of open- and
closed-end funds and separately managed accounts. Salient was
founded in 2002 and has offices in Houston and San
Francisco. Learn more about Salient at
www.salientpartners.com.
1 Past performance is not indicative of future
results. Current performance may be higher or lower than the data
shown. The data shown are unaudited. Returns do not reflect the
deduction of taxes that shareholders may have to pay on Fund
distributions or upon the sale of Fund shares.
2 Source: Salient Capital Advisors, LLC and Alerian,
March 31, 2022. "Alerian Midstream
Energy Select Index," "Alerian Midstream Energy Select Total Return
Index," "AMEI" and "AMEIX" are trademarks of Alerian and their use
is granted under a license from Alerian. Past performance is not
indicative of how the index will perform in the future. The index
reflects the reinvestment of dividends and income and does not
reflect deductions for fees, expenses or taxes. The index is
unmanaged and is not available for direct investment. Alerian
Midstream Energy Select Total Return Index (AMEIX) is a total
return composite of North American midstream energy infrastructure
companies that are engaged in activities involving energy
commodities. The capped, float-adjusted, capitalization-weighted
index is disseminated in real time on a price-return basis.
Inception date of the AMEIX is April 1,
2013.
3 A regulated investment company (RIC) is an
entity deemed eligible by the Internal Revenue Service (IRS) to
pass through taxes for capital gains, dividends, or interest earned
to the individual investors. A C corporation (or C-Corp) is
a legal structure for a corporation in which the owners, or
shareholders, are taxed separately from the entity.
4 Free cash flow after distributions represents
the cash a company generates after accounting for cash outflows to
support operations and maintain its capital assets
Hydrocarbon a compound of hydrogen and carbon, such as any
of those which are the chief components of petroleum and natural
gas. Share buybacks are when a company buys its own
outstanding shares to reduce the number of shares available on the
open market.
5 Source: Bloomberg, March 31,
2022.
6 Source: Energy Information Administration (EIA),
March 31, 2022.
7 Source: Goldman Sachs, March
31, 2022.
8 Fund shares do not represent a deposit or obligation
of, and are not guaranteed or endorsed by, any bank or other
insured depository institution, and are not federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve
Board or any other government agency. Data are based on total
market value of Fund investments unless otherwise indicated. The
data provided are for informational purposes only and are not
intended for trading purposes.
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SOURCE Salient Partners, L.P.