Thursday, January 16, 2014

Comments from Rich Kinder - KMI, KMP

From the Wall Street Journal, a few comments from Rich Kinder.  The Chump IRA is long KMI, and I own KMP in my taxable account.

Why Oil Tycoon Rich Kinder Feels Undervalued

Oil and natural gas pipeline magnate Rich Kinder feels undervalued.
Kinder Morgan Energy PartnersKMP +1.24%’ profit more than doubled in 2013. And it’s controlling partner, Kinder Morgan Inc.KMI +0.17%, had a six-fold increase in net income last year. But the companies’ stock prices have underperformed the market by a wide margin, Mr. Kinder lamented to investors and analysts this week while discussing earnings.
The last time Kinder Morgan felt so unloved by Wall Street was 2006, prompting Mr. Kinder to take it private a year later in a $22 billion deal.
Despite solid results from pipeline, crude-by-rail, and coal export units – not to mention $15 billion worth of projects in development – one of the bigger buyers of Kinder Morgan Inc. stock these days appears to be the chairman himself. Mr. Kinder picked up 828,000 shares in December alone, spending an estimated $27.6 million.
“I look out there and I see this huge damn footprint across North America and every time we turn around we see more ability to extract value out of it,” he said of the company’s extensive network of pipes, rail terminals, export facilities and ships used to shuttle energy around the U.S. and Canada.
“I guess I haven’t been successful in convincing the rest of the world of that, because a lot of people don’t see it,” Mr. Kinder said.
Naysayers point to Kinder Morgan’s size, claiming it’s too big to meaningfully grow any more, either by acquisition or through new projects of its own. The billionaire running it says that’s a refrain he’s heard for years, but Kinder Morgan keeps expanding, buying rivals and building new energy infrastructure.
Even so, the company recently issued earnings guidance for 2014 that disappointed a lot of analysts. Profits are projected to grow, not skyrocket.
Market sentiment started to turn against Kinder Morgan last September, when HedgeEye Risk Management LLC – a research shop that’s been strongly suggesting investors sell their shares – raised questions about Kinder Morgan’s maintenance spending, asserting corners were being cut in order to gin up a fatter cash payout for Mr. Kinder and other shareholders. At one point the war of words between HedgeEye analyst Kevin Kaiser and the company shaved $3 billion off Kinder Morgan Inc.’s market cap.
Compared to this time last year, Kinder Morgan Inc. stock is down 2.8% while that for Kinder Morgan Energy Partners has slumped 7.6%.
“We proved the doubters wrong the first time around and I anticipate the same result this time,” Mr. Kinder said on Wednesday. “You sell. I’ll buy. And we see who comes out best in the long run.”

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