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Sunoco Logistics Partners L.P.

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Sunoco Logistics owns low-risk and stable cash flow generating energy infrastructure assets. Despite crude's historic decline, this has enabled the partnership to maintain its excellent track record of earnings surprise history, beating estimates in three of the last four quarters. Other positive attributes  include its investment grade rating and strong track record for distribution growth. Finally, Sunoco Logistics' fee-based transportation and terminals assets make it less susceptible to commodity price weakness. However, we believe that MLP valuations will be largely disconnected from business fundamentals as long as the hoopla over crude prices continue. We are also concerned about the partnership’s tight distribution coverage ratio. As such, we see Sunoco Logistics units performing in line with the broader market.

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