Author Topic: KMI - Kinder Morgan  (Read 128301 times)

CorpRaider

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Re: KMI - Kinder Morgan
« Reply #320 on: February 13, 2016, 06:01:05 AM »
You guys will see this but it looks like Tepper bought a lot of the common @ ~$15 and even dropped a mil or so on some warrants.

Seems like he's just making a bet on the industry as he also picked up ETE (even larger position ~4%) and AMLP.
« Last Edit: February 13, 2016, 06:10:08 AM by CorpRaider »


enoch01

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Re: KMI - Kinder Morgan
« Reply #321 on: February 13, 2016, 06:29:44 AM »
You guys will see this but it looks like Tepper bought a lot of the common @ ~$15 and even dropped a mil or so on some warrants.

Seems like he's just making a bet on the industry as he also picked up ETE (even larger position ~4%) and AMLP.

I'm guessing this is insurance against short positions.

CorpRaider

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Re: KMI - Kinder Morgan
« Reply #322 on: February 13, 2016, 06:37:13 AM »
Maybe, but it looks like he added a lot of longs, generally speaking, last quarter.  If you will recall, he was calling for taking cash off the table in q4 2015.
« Last Edit: February 13, 2016, 06:38:56 AM by CorpRaider »

enoch01

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Re: KMI - Kinder Morgan
« Reply #323 on: February 13, 2016, 06:43:29 AM »
Maybe, but it looks like he added a lot of longs, generally speaking, last quarter.  If you will recall, he was calling for taking cash off the table in q4 2015.

No I don't recall him saying that.  However it seems to me lots of energy credit is in trouble at these commodity prices.  An astute investor such as Tepper may be short lots of it (or was in the recent past) and perhaps hedging himself (or was hedged in the recent past) with insurance on way OTM stuff like KMI warrants.

CorpRaider

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Re: KMI - Kinder Morgan
« Reply #324 on: February 13, 2016, 07:03:22 AM »
I remember, "just don't be so freaking long, ok?"  (also refreshed myself on timing of quotes).  You could be right.  I suppose the same could be said of any of these disclosures.  We will probably find out soon enough as he does a fair amount of media these days.
« Last Edit: February 13, 2016, 07:07:16 AM by CorpRaider »

merkhet

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Re: KMI - Kinder Morgan
« Reply #325 on: February 13, 2016, 08:34:43 PM »
A bit late to the game here, but I wanted to float a possible thought for the KMI warrants:
  • Energy prices are in the dumps
  • Energy credits are blowing up across the board
  • As a result, KMI is not able to access the capital markets for growth
  • This has resulted in a massive downward adjustment in their equity value
However, if energy prices were to rebound sharply in some way, would that provide KMI with access to the capital markets again? And if so, wouldn't that result in a massive upward adjustment to that equity value based on the growth engine flicking on again?

Picasso

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Re: KMI - Kinder Morgan
« Reply #326 on: February 13, 2016, 09:38:49 PM »
If the world was simple that would work out.  But how do they tap the capital markets?  Issuing more equity?  They can't issue more debt without growing EBITDA.  Issuing equity will kill the warrant value more than anything.

As far as any energy rally.... It reminds me of the massive headwinds of a strong yen for decades.  Every exporter would hedge into any yen weakness and it would just keep driving up the value of the yen.  Even with the BOJ trying their best to weaken the currency all the exporters are still happy to hedge out on any yen weakness.  There's just so many producers underwater waiting to hedge if they can, I don't see any sustained rally.

Imo I think KMI equity will eventually be close to worthless compared to $15 and the warrants are obviously toast.  Looks more to me like a hedge against short KMI credit.  KMI swaps are still trading at only 500 bps when they're highly levered and at risk for the wave of defaults coming over the next few years.

merkhet

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Re: KMI - Kinder Morgan
« Reply #327 on: February 14, 2016, 05:40:16 AM »
Sure, and I'm not thinking about the KMI warrants as an investment.

I'm just trying to figure out its utility as a hedge in a situation other than short KMI credit. For instance, if you're structurally short oil via a long position in automakers that are shifting into SUV and truck production, then could the KMI warrants provide a good hedge against higher oil prices.

This, of course, also means taking on take-or-pay counterparty risk which would seem also to be correlated somewhat with oil prices. And, of course, it's not a given that a jump back to $60 oil would necessarily push KMI equity up to where the warrants would be worth something.

But perhaps there are better ways to put on a hedge for being structurally short oil.

CorpRaider

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Re: KMI - Kinder Morgan
« Reply #328 on: February 14, 2016, 06:55:39 AM »
Given the other investments (ETE and AMLP), and my understanding of how he trades, I think he's just getting long the sector and those are a little kicker position.

wellmont

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Re: KMI - Kinder Morgan
« Reply #329 on: February 14, 2016, 10:23:27 AM »
Maybe, but it looks like he added a lot of longs, generally speaking, last quarter.  If you will recall, he was calling for taking cash off the table in q4 2015.
Agree. I think there was tons of forced selling in these names in q4. Ideal for Someone with liquidity. I think he is getting long the most hated names in the capital markets. Short energy is the consensus trade right now. And tepper is the absolute best at recognizing the "next" thing and when it's time to get off the consensus trade.
« Last Edit: February 14, 2016, 10:31:19 AM by wellmont »