Opinions
Larry Berman CFA, CMT, CTA
Kinder Morgan Energy
KMP-N
WATCH
Mar 10, 2014
Stock price when the opinion was issued
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Kinder Morgan Energy (KMP-N) or Kinder Morgan Mgmnt (KMR-N)? This is a big pipeline company in the US. You are really talking about owning the general partner or the limited partner. He would prefer this one, the limited partner, as there is less CapX risk. They just get the benefit of the growth of the limited partner.
On the pipeline side, generally speaking, valuations have gone up. If they can get the contracts they are usually “take or pay”, which reduces risks. Canadian pipelines would be a small part of their holdings. They have been backing down from their LP structure, which is seen as favourable. Dividends should grow in line with earnings with companies like this. More of a dividend story than capital appreciation.
Building out the infrastructure, pipelines and all those things, is a wonderful place to invest. Not early on this one. We are starting to see quite a decay. Five-year chart shows the last year has been weak. The best case scenario is that we find some support in the mid to low $70’s and we go sideways from there for a number of years. He would have on his radar for something you want to build a position in.