- Hedgeye analyst Kevin Kaiser unleashed a firestorm last week when he dubbed the Kinder Morgan (KMI) companies a "house of cards," but today's release of the full 45-page report produced little heat.
- The report claims Kinder's overriding strategy is to "starve the assets of routine maintenance expenses and capex in order to maximize [distributable cash flow]," and has cut nearly in half the amount of maintenance capital it spends on the pipeline assets it acquired in its 2012 purchase of El Paso (EPB).
- By cutting or deferring the maintenance spending, general partner KMI is getting more payments than it deserves, Hedgeye alleges, essentially pointing to CEO/chairman Richard Kinder, who bought $18M in KMI stock as it slumped recently.
- "Our business units perform a bottom up review of maintenance capital needs and operating expenses, with the objective being to increasingly reduce risk and improve safety," the company responds, without addressing the details of Hedgeye's report.
- In today's trading: KMI +1.9%, KMP +1.2%, KMR +1.4%, EPB +1.6%.