Opinions
Jim McGovern
Kinder Morgan Canada
KML-T
COMMENT
Jun 05, 2017
$16.520
Stock price when the opinion was issued
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DON'T BUY
The expectation was that the parent company would take what was left over after the sale of Trans Mountain. That has not yet happened, so the stock has dropped in value and returned capital back to investors. There has been no discussion on future plans, so there is nothing to get excited about here. No reason to own it.
DON'T BUY
The payout ratio on PPL is about 98%, so there is not a lot of wiggle room. He does not own this one. The company is looking to buy KML. He has a short on this simply because they are already long KML. The balance sheet is better than most pipelines out there. However, it does not score cheaply enough on valuations for him to want to buy today. Yield 5.2%
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PAST TOP PICK
(A Top Pick Feb 14/19, Up 5%) Kinder Morgan Canada was purchased by Pembina Pipeline. This was the TMX project. He was hoping for a better price in the acquisition, so the return was muted.
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Kinder Morgan (KMI-N) or Kinder Morgan Canada (KML-T)? In the short term, he would choose neither. If certain things happen, he would look at the Kinder Morgan Canada position. The Canadian subsidiary, without the pipeline expansion, is worth $15. That is just on the assets and the quality of the assets. Since you can get the shares close to $15, you are getting all the optionality. He is waiting for an opportunity to get this under $16. In the US, it is an MLP, and he is not positive on the MLP market. There is just so much debt associated in that area.