HOUSTON, July 11,
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 June 30, 2022.
On June 30, 2022, the Fund's total
assets were $199.7 million and the
NAV per share was $7.94. On
June 30, 2022 the closing share price
of the Fund was $7.57, which was
trading at a 4.7% discount to the NAV.1 The Fund's NAV
and market price total returns for the month of June were -18.3%
and -10.9%, respectively, compared to -13.2% 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
8.5% and 14.8%, respectively, compared to 10.0% for the
AMEIX.2
On June 28, 2022, after
consideration of a variety of factors and alternatives, the Board
of Trustees determined that it would be in the best interest of
shareholders to reorganize SMM into Salient MLP & Energy
Infrastructure Fund ("SMLPX") (the reorganization of SMM into SMLPX
is the "Reorganization"). The proposal to reorganize SMM into
SMLPX will require the approval of SMM shareholders. This press
release is not intended to, and does not constitute an offer to
purchase or sell shares of SMM or SMLPX (together, the "Funds") nor
is this press release intended to solicit a proxy from any
shareholder of the Funds. The solicitation of the purchase or sale
of securities or of proxy to effect the Reorganization will only be
made by a definitive Proxy Statement/Prospectus. The Proxy
Statement/Prospectus has yet to be filed with the U.S. Securities
and Exchange Commission (the "SEC"). After the Proxy
Statement/Prospectus is filed with the SEC, it may be amended or
withdrawn. The Proxy Statement/Prospectus will not be distributed
to shareholders of SMM unless and until a Registration Statement
comprising of the Proxy Statement/Prospectus becomes effective with
the SEC.
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 the distribution rate and the Fund's performance over multiple
time period's versus its peers is provided in the table below along
with a ranking of SMM vs. peers.
|
|
|
Market
Price
|
|
NAV
|
Name
|
Yield
|
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
|
4.6 %
|
-4.7 %
|
14.8 %
|
32.9 %
|
1.9 %
|
-1.8 %
|
-6.0 %
|
-2.3 %
|
2
|
8.5 %
|
4.8 %
|
-2.2 %
|
-2.6 %
|
-8.4 %
|
-1.9 %
|
3
|
Manager A
|
9.5 %
|
-17.9 %
|
13.6 %
|
11.9 %
|
-19.4 %
|
-14.0 %
|
-11.4 %
|
-5.5 %
|
8
|
9.6 %
|
6.8 %
|
-18.1 %
|
-12.6 %
|
-12.0 %
|
-4.7 %
|
9
|
Manager B
|
8.5 %
|
-18.2 %
|
8.5 %
|
7.0 %
|
-6.9 %
|
-5.8 %
|
-9.6 %
|
-3.9 %
|
4
|
5.7 %
|
8.6 %
|
-6.5 %
|
-3.6 %
|
-9.6 %
|
-3.3 %
|
6
|
Manager C
|
6.5 %
|
-22.7 %
|
-6.4 %
|
-1.0 %
|
-4.6 %
|
-2.6 %
|
-5.0 %
|
-8.2 %
|
9
|
-0.6 %
|
-4.6 %
|
-1.9 %
|
-0.8 %
|
-5.5 %
|
-3.8 %
|
8
|
Average RIC
Excluding SMM
|
8.2 %
|
-19.6 %
|
5.2 %
|
5.9 %
|
-10.3 %
|
-7.4 %
|
-8.6 %
|
-5.9 %
|
|
7.7 %
|
7.7 %
|
-8.8 %
|
-5.7 %
|
-9.0 %
|
-4.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manager D
|
4.1 %
|
-18.4 %
|
16.7 %
|
24.7 %
|
-1.3 %
|
-2.6 %
|
-6.4 %
|
--
|
-
|
14.8 %
|
20.8 %
|
0.0 %
|
-0.9 %
|
-5.5 %
|
--
|
-
|
Manager E
|
8.1 %
|
-18.9 %
|
11.8 %
|
8.2 %
|
-10.5 %
|
-8.4 %
|
-8.3 %
|
-5.0 %
|
7
|
10.8 %
|
8.7 %
|
-9.5 %
|
-6.6 %
|
-8.3 %
|
-3.3 %
|
5
|
Manager F
|
8.4 %
|
-17.2 %
|
10.4 %
|
5.3 %
|
-14.1 %
|
-9.6 %
|
-10.0 %
|
-4.6 %
|
5
|
10.8 %
|
7.5 %
|
-13.2 %
|
-7.7 %
|
-9.4 %
|
-3.1 %
|
4
|
Manager G
|
9.5 %
|
-12.9 %
|
12.4 %
|
2.6 %
|
-10.1 %
|
-6.2 %
|
-8.0 %
|
-3.2 %
|
3
|
10.2 %
|
9.3 %
|
-10.3 %
|
-3.8 %
|
-5.7 %
|
-1.1 %
|
2
|
Manager H
|
5.6 %
|
-15.3 %
|
21.5 %
|
27.5 %
|
-32.8 %
|
-22.2 %
|
-17.7 %
|
--
|
-
|
10.1 %
|
16.4 %
|
-30.3 %
|
-20.1 %
|
-17.3 %
|
--
|
-
|
Manager
I
|
6.3 %
|
-19.7 %
|
11.4 %
|
3.3 %
|
-32.6 %
|
-22.6 %
|
-20.8 %
|
--
|
-
|
9.6 %
|
6.8 %
|
-30.7 %
|
-20.1 %
|
-18.3 %
|
--
|
-
|
Manager J
|
8.5 %
|
-19.6 %
|
11.8 %
|
9.6 %
|
-12.5 %
|
-9.6 %
|
-9.3 %
|
-4.8 %
|
6
|
9.3 %
|
8.1 %
|
-11.5 %
|
-7.4 %
|
-9.5 %
|
-3.6 %
|
7
|
Manger K
|
9.6 %
|
-18.4 %
|
10.2 %
|
15.9 %
|
-32.9 %
|
-22.9 %
|
-15.9 %
|
-11.0 %
|
11
|
9.0 %
|
7.3 %
|
-30.5 %
|
-19.6 %
|
-15.8 %
|
-9.2 %
|
11
|
Manager L
|
7.8 %
|
-11.6 %
|
9.6 %
|
5.5 %
|
-6.5 %
|
-6.2 %
|
-4.2 %
|
--
|
-
|
7.7 %
|
7.4 %
|
-6.3 %
|
-3.8 %
|
-4.9 %
|
--
|
-
|
Manager M
|
7.5 %
|
8.8 %
|
19.8 %
|
19.0 %
|
-0.7 %
|
1.0 %
|
0.3 %
|
2.8 %
|
1
|
7.0 %
|
7.3 %
|
-3.7 %
|
-0.3 %
|
-2.0 %
|
2.5 %
|
1
|
Manager N
|
9.6 %
|
-18.5 %
|
10.9 %
|
10.8 %
|
-25.6 %
|
-17.9 %
|
-13.4 %
|
-8.2 %
|
10
|
5.8 %
|
6.2 %
|
-22.1 %
|
-13.6 %
|
-12.5 %
|
-5.2 %
|
10
|
Average
C-Corp
|
7.7 %
|
-14.7 %
|
13.3 %
|
12.0 %
|
-16.3 %
|
-11.6 %
|
-10.4 %
|
-4.9 %
|
|
9.5 %
|
9.6 %
|
-15.3 %
|
-9.5 %
|
-9.9 %
|
-3.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEF Universe
Average
|
7.6 %
|
-15.0 %
|
11.8 %
|
12.2 %
|
-13.9 %
|
-10.1 %
|
-9.7 %
|
-4.9 %
|
|
8.5 %
|
8.0 %
|
-13.2 %
|
-8.3 %
|
-9.6 %
|
-3.4 %
|
|
Source: Salient Capital
Advisors, LLC, June 30, 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 -2.3% has outperformed the RIC Average of -5.9%
and the with the C-Corp average of -4.9%. Likewise, on a NAV basis,
SMM's ITD return of -1.9% compares favorably to the -4.0% return
for the peer group of RIC Funds and -3.3% for C-Corp Funds.
June Market Commentary
June was a difficult month for
energy infrastructure equities which were down 13.2% as measured by
the Alerian Midstream Energy Select Index (AMEIX).2 We
believe the proximate cause for the June correction was a market
fear that a recession had started or will begin soon. In the past
two recessions, oil demand has declined and we think investors have
priced in some of those expectations today. Looking at past
recessions, demand doesn't always decline – in both the 2001 and
1991 recessions global oil demand actually continued to
grow.3 We will look to additional data points in coming
months to determine whether demand is being impacted. Based on data
in hand it still appears that demand continues to outstrip supply
and that global inventories are continuing to decline at this
time.3 For the remainder of 2022, we remain positive on
the industry as 1) free cash flow after dividends is growing at a
healthy pace, 2) hydrocarbon volumes are growing as drilling
activity improves and 3) capital allocation remains mostly focused
on returning excess cash to investors through buybacks and
potential dividend increases.4
Crude oil as measured by the West Texas Intermediate (WTI)
benchmark was down 7.8% for the month of June but is now up 40.6%
for 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. Europe's move towards sanctioning Russia's energy exports could lead to a
further spike in global crude oil and natural gas prices. Longer
term, we view crude oil prices in the $70-$80 per barrel
range as being positive for 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 energy
consumption continues to rise post COVID.7 Commodity
analysts continue to see a tight supply environment for both crude
oil and natural gas in 2022 and potentially into 2023. We believe
that current prices are sufficient to lead to U.S. volume growth in
2022. The promise of these incremental volumes should be supportive
of midstream companies.
The Fund's Top 10 holdings as of June 30,
2022 are shown below:8
No.
|
Symbol
|
Name
|
Country
|
Asset
Type
|
% of Gross
Assets
|
1
|
ET
|
Energy Transfer
L.P.
|
United
States
|
MLP
|
9.4 %
|
2
|
TRGP
|
Targa Resources
Corp.
|
United
States
|
C-Corp
|
6.8 %
|
3
|
LNG
|
Cheniere Energy,
Inc.
|
United
States
|
C-Corp
|
6.6 %
|
4
|
-
|
EMG Utica | Offshore
Co-Investment LP
|
United
States
|
C-Corp
|
6.5 %
|
5
|
PPL CN
|
Pembina Pipeline
Corp.
|
Canada
|
C-Corp
|
5.8 %
|
6
|
ENB
|
Enbridge,
Inc.
|
United
States
|
C-Corp
|
5.6 %
|
7
|
MPLX
|
MPLX L.P.
|
United
States
|
MLP
|
4.8 %
|
8
|
WMB
|
The Williams Companies,
Inc.
|
Canada
|
C-Corp
|
4.7 %
|
9
|
PAGP
|
Plains GP Holdings
L.P.
|
United
States
|
C-Corp
|
4.5 %
|
10
|
TRP
|
TC Energy
Corp.
|
Canada
|
C-Corp
|
4.4 %
|
|
|
|
|
|
59.2 %
|
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, June 30, 2022.
|
The Fund's unaudited balance sheet as of June 30, 2022 is shown below:
Salient Midstream
& MLP Fund
|
Balance
Sheet
|
June 30,
2022
|
(Unaudited)
|
|
|
Assets
|
(in
millions)
|
Investments
|
$198.1
|
Other Assets
|
0.2
|
Cash and Cash
Equivalents
|
1.4
|
Total Assets
|
$199.7
|
|
|
Liabilities
|
|
Line of Credit
Payable
|
$58.3
|
Other
Liabilities
|
0.6
|
Total
Liabilities
|
$58.9
|
Net
Assets
|
$140.8
|
|
|
The Fund had 17.7
million common shares outstanding as of June 30, 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.
SMLPX seeks to maximize total return (capital appreciation and
income). SMLPX seeks to achieve its investment objective by
investing at least 80% of its net assets in securities of MLPs and
energy infrastructure companies. Investing involves risk including
the potential loss of principal. SMLPX may engage in other
investment practices that may involve additional risks and you
should review the prospectus for a complete description.
You should consider the investment objective, risks, charges
and expenses of SMLPX carefully before investing. The prospectus
and summary prospectus contain this and other information about
SMLPX and are available, along with information for SMM, by calling
866-667-9228. They should be read carefully before
investing.
Advisory services offered by Salient Capital Advisors, LLC (the
"advisor"), a wholly owned subsidiary of Salient Partners, L.P.
Salient is the trade name for Salient Partners, L.P., which
together with its subsidiaries provides asset management and
advisory services. Salient MLP & Energy Infrastructure Fund is
distributed by Foreside Fund Services, LLC.
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,
June 30, 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 Source: International Energy Agency (IEA),
July 2002.
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, June 30,
2022.
6 Source: Energy Information Administration (EIA),
June 30, 2022.
7 Source: Goldman Sachs, June 30,
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.