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Ian Bezek  

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  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    I don't see this being a good short as the stock will likely keep rising as long as the dividend can be hiked. Until Kinder loses access to new capital, I except the financial engineering to continue.

    If I were to play the short side, it'd be through way out of the money options. The most-logical endgame to the Kinder bubble is a downgrade to junk territory which makes them cut the dividend and causes a waterfall in the stock as the yield tourists check out. I'd rather not be short the stock and paying the dividend for years while waiting for the endgame to occur.
    May 11, 2015. 07:27 PM | Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Revenues and earnings aren't up, analysts have very muted guidance for 2015.

    The stock price is up, but judging a company's underlying strength by its short-term stock price swings is a dangerous game.
    May 11, 2015. 07:24 PM | 3 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Thanks for your comment. I agree that contrary opinions are a great barometer.
    May 11, 2015. 07:22 PM | 3 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Probably won't see $36 again. Either the stock will keep rising if the financial engineering manages to keep functioning, or at some point the dividend will get cut and the stock will open the next day far below $36.
    May 11, 2015. 07:21 PM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    "Kinder Morgan is extremely shareholder friendly and almost transparent to a fault. The consolidation into KMI also confuses people who aren't willing to look at the parts before and after. "

    What is there to be confused about? KMP holders were sold a story where they could collect tax-advantaged yields for their lifetimes and then pass it on to their heirs without tax issue. Kínder broke this implicit promise. Kinder received below-market rate access to capital from KMP's holders for many years because of this sleight of hand.

    What he did is legal and savy, but it was a real brutal kick to KMP holders and shows where management's priorities lie (seemingly not with their little retail partner). Someone owning KMP lost a large chunk of their dividend income overnight, paid a huge tax bill and now has to pay taxes on future dividends. Just brutal.

    You're right their business results are counterintuitive as is their stock price with the rest of the pipelines seeing falling earnings and slowing dividend increases. Kinder cut 2015 EBITDA guidance as well (they're not actually so different from the other pipelines in this regard) but with people's eyes so fixed on the dividend table, no one really seemed to mind.
    May 11, 2015. 07:19 PM | 4 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    To condense your comment, you're saying that pipeline depreciation is not a "real" expense, correct? I'll address this argument in the next article.
    May 11, 2015. 07:15 PM | 3 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    I think I mentioned why in the article. Better shorts to be had in the energy space. Overvalued stocks can remain overvalued for a long time, and perhaps KMI can grow into its valuation, particularly if energy rebounds and interest rates stay low.
    May 11, 2015. 07:13 PM | 6 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Interest rate sensitivity is lowered due to hedges. Both hedges and fixed-rate debt will roll off with time. Higher interest rates will bring higher interest burden sooner or later. Whether it's next year or next decade, if you're a long-term holder of KMI, it's an issue.
    May 11, 2015. 07:11 PM | 2 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Selling equity and then giving the money back to shareholders doesn't achieve much.
    May 11, 2015. 07:10 PM | 2 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Do you see railroads running at 200% dividend payout ratios and 53 PE ratios?

    (I own UNP)
    May 11, 2015. 07:09 PM | 7 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Mantras are good. Builds herd cohesion.
    May 11, 2015. 07:09 PM | 14 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    This is a C-Corp now. Whether this MLP in a C-Corp's clothing experiment will work is tbd. But the payout ratio is correct. They pay out far more than their economic earnings. Whether or not this is sustainable is the question of the hour.
    May 11, 2015. 07:08 PM | 6 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    A little over $10bn iirc.

    They have substantial interest rate hedges that generate $100mn+ swings in value year to year.
    May 11, 2015. 07:06 PM | 2 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Thanks for explaining to the above question. As to the second part, I don't have a bone to pick, so we'll go with the uninformed explanation.
    May 11, 2015. 07:06 PM | 4 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    BBB- isn't good. Yes it's better than some other stuff, but it's not in the same league as the stocks most DG investors hold.
    May 11, 2015. 07:04 PM | 4 Likes Like |Link to Comment
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