Enterprise Products Partners L.P. (EPD), Buckeye Partners, L.P. (BPL)…Ignore Cramer: Don’t Buy MLP IPOs Blindly

“It’s a tremendous structure, you should buy them sight unseen.”
This is perhaps the most insulting advice I’ve ever heard offered up to individual investors. It’s akin to walking into a car dealership and having the dealer show you two trucks. The first truck has an engine built by Ford Motor Company (NYSE:F), and the second truck features an engine built out of blocks by a five-year-old. “They’re both trucks,” the dealer tells you, “just close your eyes and pick one.”

Structure guarantees nothing, it’s what’s under the hood that matters. And even then there are no guarantees. I’ll leave it at that.

Bottom line
Like any stock, some MLPs offer a lot of upside to investors, but others can come with significant downside. The MLP structure itself does not guarantee anything, and investors should do their research before buying into one. Buying an MLP at its IPO sight unseen is a ludicrous notion, and one that could ultimately wreak havoc on your portfolio.

The article Ignore Cramer: Don’t Buy MLP IPOs Blindly originally appeared on Fool.com and is written by Aimee Duffy.

Fool contributor Aimee Duffy owns shares of Ford Motor Company (NYSE:F). The Motley Fool recommends Enterprise Products Partners L.P. (NYSE:EPD) and Ford. The Motley Fool owns shares of Ford.

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