Portfolio

[hendi_alex]

KMP is trading at near yearly low and issues yet another secondary. What timing companies often have for selling its stock! If KMP respresents such a value at this level, as claimed by management, they should be issuing debt and buying shares. What does it say, the fact that they are instead selling shares? According to the linked discussion, KMP is selling the equity to pay down debt. The yield on debt is very low, yet the shares issued will yield almost 7%. This move will result in several percentage points of negative cash flow on the amount of debt paid out. This equity issuance is purely dilutive and represents yet another red flag against buying KMP at this point.

I'm not a great fan of S.A. articles in general, but this one seems to be balanced and factual.
http://seekingalpha.com/article/2030021-...urce=yahoo

I pulled this quote from the prospectus for the offering:
"We expect to use the net proceeds from this offering to repay commercial paper debt and for general partnership purposes."

"This may include, among other things, additions to working capital, repayment or refinancing of
existing indebtedness or other partnership obligations, financing of capital expenditures and acquisitions, investment in existing and future projects, and
repurchases and redemptions of securities."

Given likely uses for this cash, this issue would appear dilutive to the extent of about 2% as measured against current outstanding shares of KMP stock.