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+--- Thread: KMP big downdraft (/showthread.php?tid=413)
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KMP big downdraft - hendi_alex - 02-24-2014
The story keeps surfacing, suggesting that KMP is overstating their cash flow. For an MLP, cash for is everything, at least to investors, as that funds the dividend stream. Shares of KMP are down over 5% as I type and they take down is similar for KMI and KMR. This could be a matter of an analyst's misunderstanding of the business model, could be an intentional attack via misinformation, or could be on target. Anyone have an opinion as to which is the case for KMP?
BTW, KMP is not the sole target of these allegations. LINE, LNCO, BBEP, and others have been the focus of similar comments.
RE: KMP big downdraft - cazantyl - 02-24-2014
I've been watching this as well. I think this is just a massive misunderstanding of their business model as you said. It's honestly great for us, since it discounts KMP's already fairly low price even further.
Barron's did this same style of smear piece against LINE and it didn't work out too well for Barron's. Kind of a shame that they're doing it again.
For those that want to read the full article from Barron's:
http://online.barrons.com/article/SB50001424053111903713804579394913023088996.html?mod=BOL_hp_highlight_1
RE: KMP big downdraft - hendi_alex - 02-24-2014
If I buy, will likely opt for KMI. KMI the general partner pays a lower yield at 5%, but since it will get the lion's share of increased cash flow, KMI's earnings will likely grow quicker and will be somewhat more insulated from the issues that surround KMP and KMR.
First time this afternoon I've had time to sit down and consider this sell off. Decided to go ahead pick up a few shares of KMI. They were bought in the IRA, but will move them into the cash account whenever enough cash accumulates there. If the cash flow issue turns out to be nothing more than reckless talk, then these will turn out to be for the long term. I do find it interesting that according to Yahoo, there is very little short interest in KMI.
RE: KMP big downdraft - cazantyl - 02-24-2014
Good call on KMI. As an aside, I was pretty impressed with Kinder's response to the Barron's article:
http://www.kindermorgan.com/investor/presentations/KMP_Responses_to_Barrons.pdf
RE: KMP big downdraft - fiveoh - 02-24-2014
I bought my first chunk of kinder today with some KMI. I like buying opportunities based on negative press/opinions!
RE: KMP big downdraft - jcirafic - 02-24-2014
Picked up more KMP today. This to me is a buying opportunity.
RE: KMP big downdraft - rnsmth - 02-26-2014
I own KMi. Reinvesting dividends. As longer as Kinder keeps buying shares and the dividend seems safe with sustainable growth, I will hold it.
Josh Peters put out a note on Kinder last week- he has KMP in his Dividend Harvest portfolio and KMI in his Dividend Builder portfolio. Bottom line is that he is going to continue holding both.
RE: KMP big downdraft - fiveoh - 02-26-2014
How hard is it to do the taxes on a MLP in a non tax advantaged(regular trading) account? I usually use turbo tax and its easy for dividends. I'm looking at buying some KMP if it continues to drop but don't currently own any MLPs.
RE: KMP big downdraft - hendi_alex - 02-26-2014
If bothered by tax implication, why not just buy KMR, which is the same as KMP but pays the dividend in shares. IMO, this is essentially the same as owning KMP when set up with drip. Except KMR represents the greater value, as shares currently sell at a discount to KMP, therefore yield a little higher %.
RE: KMP big downdraft - fiveoh - 02-26-2014
(02-26-2014, 09:59 AM)hendi_alex Wrote: If bothered by tax implication, why not just buy KMR, which is the same as KMP but pays the dividend in shares. IMO, this is essentially the same as owning KMP when set up with drip. Except KMR represents the greater value, as shares currently sell at a discount to KMP, therefore yield a little higher %.
I was planning on using the income, not reinvesting, which is why I wanted KMP. I'm just unsure about the tax implication. Will the brokerage keep track of my cost basis, like they do with my div reinvestment or will I need to do that on my own?
RE: KMP big downdraft - hendi_alex - 02-26-2014
No help from me on that, I just take my K-1's to the CPA and she makes sense of them and files the return. Quite the bargain IMO, at only $160 per year for taxes that have usually included two rental houses, taxable stock account info, timber sales, itemized deductions, plus usual other usual stuff. The houses are no longer included, but still the filing has quite a few forms for both state and federal.
RE: KMP big downdraft - rnsmth - 02-27-2014
Roger Conrad on Kinder
http://seekingalpha.com/article/2052913-kinder-morgan-energy-partners-still-not-a-house-of-cards