Kinder Morgan Inc. (KMI)

He would play a gas producer for a gas bounce back (ARX-T). KMI-N is a pipeline company mostly and they had financial issues, which scares him. It is a turnaround story.

Pretty much anything you bought shortly after BREXIT has done really well, including this one. This is now showing some stability and share price appreciation. Although it is well off of its highs, he is not comfortable with its valuations. If you have made some good, short-term money, he would be a seller. On the other hand, if you have lost money, he wouldn’t be in a rush to Sell, because it is still quite a way off from where it was at its highs. Doesn’t like this one long-term.

(Market Call Minute.)

A pipeline/utility type stock. A long-term investment, not a trading stock. You buy this for income, and hopefully some capital gain. He doesn’t understand why you would buy a US company like this, when you can buy a Canadian company like Enbridge (ENB-T) or TransCanada Pipe (TRP-T) and get a better tax treatment on dividends.

The largest distributor of natural gas in North America. It got hammered because everybody thought it was going to be cut to junk. They cut the dividend, but their higher yields are trading at or higher than they were back in the middle of last year. So there is no stress on their high yields. If they go back to the market and finance their expansion with debt, maybe that dividend comes back. Feels natural gas is going to have a nice rally. Dividend yield of 2.88%.

There are 2 cautionary notes on this. 1.) They have offered a partnership. Canadian investors who buy US partnerships are subject to a 35% tax on the dividend. However, they now offer a share class that is not a partnership. 2.) Richard Kinder is the CEO. He was the president of Enron. Has grand ambitions, and is more interested in making the company big rather than making shareholders rich.

Prefers EMB-T, better balance sheet, management and quality of assets. Keep in mind these are all big dividend payers. They have debt and so if interest rates go up, it will hurt them.

Model price is $15.73. He said in 2015 the stock was wildly overvalued and it crashed. He thinks it is still 15% over valued since they slashed the dividend. He thinks it has to re-test EBV -2 and we may see that in the fall sometime. He would not be tempted.

As the price of oil declined, the likelihood of volume growth waned. He thinks there is a short term tactical bounce, however. If you had to own something in energy, he would go for an integrated or an infrastructure company. You could hold this one, however. You should not buy it with the old expectations of dividend growth. You will probably do okay.

Had been highly leveraged, and sometimes leverage does not work your way. Hurts your earnings and dividends. You buy a pipeline utility stock for the stability of earnings and the stability of dividends. He would stick with buying Canadian pipelines and utility companies.

It is in a distinct downward trend and has not shown signs of bottoming. It is below its 20 day moving average. Seasonally it is normally strong late January to April.

Would much rather see you holding something that was going sky high and crystallizing a gain, but in this case it is the right time to crystallize the loss to offset some gains you would have in your portfolio. He doesn’t feel good about the oil/gas space right now.

Coming into tax loss selling season, you may wish to sell to offset any realized gains. Excluding this fact, this company is one of the best pipeline companies in North America. The dividend is safe.

It is not going to go bankrupt but the stock is broken right now. It’s a pipeline stock, not a commodity but it is trading off commodities. Give it a couple of years. You could add or hold if you have the two years.

Had 3 MLPs along with the General Partner Kinder Morgan Inc. The MLPs had grown fairly rapidly. When they grow and start to pay distributions out they have to pay 2% of the cash flow to the general partner, and the remainder gets split with LP units of the MLP. That becomes cost prohibitive as the MLP grows. Because of this, Kinder Morgan collapsed them. This freed up the capital for them to grow to do deals. Income is stable and is going to grow at 10% for the next 5 years. Have done a phenomenal job of navigating through the commodity cycle.