Author Topic: KMI - Kinder Morgan  (Read 133233 times)

junto.investing

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KMI - Kinder Morgan
« on: May 02, 2012, 09:21:03 AM »
Just came across this write up on VIC:

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/64602

While KMI seems fairly valued to me at the moment, the 5 year warrants with a $40 strike (KMI currently at $36; KMIIV currently at $2.35) could make an attractive investment. There's been some really good discussion on the TARP warrants - would love to hear other people's thoughts on these particular warrants.

You'll note the that the warrants are trading on a when-issued basis. So I'm assuming there's some deal risk (El Paso) there. But judging from Kinder's track record, I'd expect this deal to close in May. 
« Last Edit: May 02, 2012, 05:19:06 PM by Parsad »


twacowfca

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Re: KMI - Kinder Morgan
« Reply #1 on: May 02, 2012, 11:00:08 AM »
Just came across this write up on VIC:

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/64602

While KMI seems fairly valued to me at the moment, the 5 year warrants with a $40 strike (KMI currently at $36; KMIIV currently at $2.35) could make an attractive investment. There's been some really good discussion on the TARP warrants - would love to hear other people's thoughts on these particular warrants.

You'll note the that the warrants are trading on a when-issued basis. So I'm assuming there's some deal risk (El Paso) there. But judging from Kinder's track record, I'd expect this deal to close in May.

I think the trade in a when issued security should be canceled if the new security isn't issued.   Check with your broker to verify this.  The big risk is that the underlying securities will reverse their recent direction when the deal goes through because the arbitrage will be wound down.  Will this hurt or help you?   The long term fly in the ointment is that high dividend paying stocks can sap away the value of holding a LEAP over time.  There is some protection adjusting the strike price after dividend increases, but this doesn't make up for the attrition on a security that is projected to pay a high dividend.

enoch01

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CorpRaider

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Re: KMI - Kinder Morgan
« Reply #3 on: December 04, 2013, 11:48:14 AM »
Bump.  I've had this on my radar as a potential best in class play on north american energy distribution with an owner/operator at the helm and what morningstar describes as a moat due to scale (not sure I'm 100% with them on that).  Anyway, it is selling off today on disappointing outlook from the recently (last year) acquired EP.  Could be an opportunity created by integration/merger noise.  Am just flagging it for further examination.  Here's one of the stories attempting to explain today's action:  http://finance.yahoo.com/news/kinder-morgan-falls-disappointing-forecasts-183901548.html

Also note Hedgeye put out a negative report about their accounting practices, somewhat in the vein of the LINE report.  I found neither analysis very compelling, but just FYI.
« Last Edit: December 04, 2013, 02:32:33 PM by CorpRaider »

globalfinancepartners

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Re: KMI - Kinder Morgan
« Reply #4 on: December 04, 2013, 01:00:13 PM »
I've been adding to KMR all day.  7.4% yield for 2014 and more like 7.65% with the quarterly compounding.  KMR/KMP was up last night after hours on the news of 5.58 distribution target for 2014 (which they will likely surpass) - but down big this morning once analysts chimed in. 

CorpRaider

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Re: KMI - Kinder Morgan
« Reply #5 on: December 05, 2013, 07:52:33 AM »
Thanks for the response.  Yeah, probably a more astute move to pick up the KMR, since el paso doesn't feed into it and that was the real disappointment in the guidance.  I'm hoping to get some KMI a little below its initial post IPO price from a couple years back so $30-ish.

globalfinancepartners

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Re: KMI - Kinder Morgan
« Reply #6 on: December 05, 2013, 08:10:10 AM »
I expect to see a few more of these, but here is the first insider purchase filing from this recent drop in KMI -
http://www.sec.gov/Archives/edgar/data/1015883/000158474613000011/xslF345X03/primary_doc.xml

I prefer KMR because of the yield, the reinvestment of distributions and the suitability for an IRA over large amounts of KMP.  Also KMR tends to trade at a large discount to KMP.  I added heavily again this morning for folks in or near retirement.

buylowersellhigh

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Re: KMI - Kinder Morgan
« Reply #7 on: December 05, 2013, 08:16:55 AM »
Doesn't KMR make sense in a taxable account more than a tax-deferred account?  With the stock distribution, you only have to worry about capital gains.  Makes for an efficient use in a taxable account.

CorpRaider

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Re: KMI - Kinder Morgan
« Reply #8 on: December 05, 2013, 08:37:35 AM »
You probably know this, buylow, but KMR is an LLC which has elected to be taxed as a C corp and pays essentially stock dividends.  It does likely make more sense in a taxable account than KMP, but in a tax deferred (US) account he's probably worried about too much UBIT passing through from the subchapter K entity (KMP).  I like the KMI because the GP is at least projected to get more of the growth (although that seems to be the problem in the guidance). 

Of course, all I'm really doing is sucking my thumb (as usual)...
« Last Edit: December 05, 2013, 08:47:47 AM by CorpRaider »

globalfinancepartners

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Re: KMI - Kinder Morgan
« Reply #9 on: December 19, 2013, 05:15:44 PM »
I expect to see a few more of these, but here is the first insider purchase filing from this recent drop in KMI -
http://www.sec.gov/Archives/edgar/data/1015883/000158474613000011/xslF345X03/primary_doc.xml

I prefer KMR because of the yield, the reinvestment of distributions and the suitability for an IRA over large amounts of KMP.  Also KMR tends to trade at a large discount to KMP.  I added heavily again this morning for folks in or near retirement.

Well, I said I expected to see a few more and it took a few days - but here's the recently reported $27 million purchase by Richard Kinder

http://www.sec.gov/Archives/edgar/data/1031190/000158474613000012/xslF345X03/primary_doc.xml

(Greehey bought $5m of NS reported today as well)