Seeking Alpha

Kinder Morgan braces for second tough report from Hedgeye

  • Kinder Morgan (KMI +0.4%) could find itself on the defensive today when Hedgeye releases his second note in recent weeks critical of the company’s maintenance practices.
  • Richard Kinder says his companies don’t cut corners on safety and noted that, like many other MLPs, KMI/KMP/KMR records much of its maintenance work as expenses instead of capital costs, which don’t impact cash distributions.
  • Hedgeye's Kevin Kaiser says he stands by his original analysis, and will follow it up in today’s report; he believes Kinder eventually will need to issue debt or equity to pay for broken-down systems.
  • “MLPs in general are massively overvalued, and we’re going to have a correction," Kaiser believes.
Comments (24)
  • So this Kaiser guy is 3 years removed from his undergrad at Princeton and he is moving markets?? He has not even held a real job, perhaps daddy is funding him...
    26 Sep 2013, 10:55 AM Reply Like
  • It's amazing how diluted many of these 'elite' are. They think they know everything because they have money and born into the upper class. The guy would have some clout if he had been in the business for 30 years... but there isn't a single institution around that is backing Hedgeye up on this matter...


    Kevin... go pound sand...
    26 Sep 2013, 10:58 AM Reply Like
  • Yep pretty interesting how a dude with 3 whole years experience is supposed to be a trusted source. I wonder if he worked on a pipeline while at Princeton and has inside sources ...LOL.
    26 Sep 2013, 11:00 AM Reply Like
  • If the market moves on his report, I will add to my KMP, KMI, and EPB holdings like I did a few weeks ago.
    26 Sep 2013, 11:26 AM Reply Like
  • Oh, believe me... I have my next cash infusion itching to buy more KM if there is another sell-off. Got to love fear!
    26 Sep 2013, 12:50 PM Reply Like
  • AWESOME! I missed the boat last time. But this time I have funds available to buy on the dip, so BRING IT ON!
    26 Sep 2013, 10:59 AM Reply Like
  • KMI is NOT AN MLP!
    26 Sep 2013, 11:00 AM Reply Like
  • Guilt by association. Unfortunate that this young @$$#%* can influence the market! When is his article/report/whatever due out?
    26 Sep 2013, 12:47 PM Reply Like
  • True, but it's nice that a snarky ego like this can give us 'poor' folks better buy points for stock in a great company.
    26 Sep 2013, 12:52 PM Reply Like
  • I hope theres a big correction in MLPs I'll call the buying opportunity the "Kaiser Crash"
    26 Sep 2013, 11:06 AM Reply Like
  • And the Band palys on
    26 Sep 2013, 11:08 AM Reply Like
  • All of the Seeking Alpha articles that debunk Hedgeye's report compare Kinder Morgan's spending to other similar MLP and Pipeline companies and find that they all spend similar amounts on the maintenance of there pipelines thus coming to the conclusion that Kinder Morgan is not under spending on maintenance of its pipeline assets. This however ignore the published reports by the Federal agency responsible for oversight of the nations pipelines and the California agency with the job that find that the entire industry nationwide is greatly under spending on the maintenance of the pipelines that are 20 years old and older. There is discussion in congress as to how best to respond to the recommendations of the agencies that more frequent and more complex inspections be funded so that the pipeline companies can be presented with repair orders based on better information then currently is available to the regulators.
    26 Sep 2013, 11:37 AM Reply Like
  • SYXXF.............get on the train...
    26 Sep 2013, 12:43 PM Reply Like
  • So let's see here, "Federal" agency and "California" agency, Hmmmm... Did they call out Kinder Morgan specifically? If it is all the similar MLPs and Pipeline companies, then Hedgeye should be writing about all of these companies. Seems like there is a lot of "generalizing" going on. Haven't heard any specifics, just generalizations.
    26 Sep 2013, 03:08 PM Reply Like
  • Does this guy even manage money ? Anyone can write positive or negative reports and not take the financial fallout if they are wrong. I've been in the investment industry for 35 years and have seen dozens of guys like this. Put up or shut up, Kevin.
    26 Sep 2013, 12:41 PM Reply Like
  • His short must not be going well.
    26 Sep 2013, 12:52 PM Reply Like
    Why is this inexperienced person given such credence that the attacked equities respond so negatively to his reports? Mentioned by others is that MLP's are often held by inexperienced investors and are frightened by the unexplained negatives. We react to critical reports when we know so little of the companies in which we invest, and there is so much moral hazard and pevarication prevailing in finance and politics today.


    I tend to accept Kinder's expression as valid in that maintenance is up to the standard, but then we become aware of the San Bruno, Calif. pipeline explosion: Not a just a spill, but destruction and deaths due to faulty welds that had been buried for years. With thousands of miles of pipelines, many decades old, there is bound to a headline grabbing break that will be taken by the critics as proof they were right.
    26 Sep 2013, 01:24 PM Reply Like
  • Second report? lol. What's the matter, couldn't you say it all in just one report, Kaiser? Or, is your short still losing money?
    26 Sep 2013, 01:31 PM Reply Like
  • All 3 trading up. (yawn)
    26 Sep 2013, 01:48 PM Reply Like
  • Now hold on a bit. I'm 83 and realize 26 is a bit young. But what matters is facts. Facts are facts whether you are 83 or 26. Most of your comments are evidently trying to defend your positions by insulting the young man who did a huge amount of research. The real question is are the facts correct. I don't know-----but I'm keeping an open mind about it.
    26 Sep 2013, 03:16 PM Reply Like
  • I have to agree. Richard Kinder did not defend KM by disparaging Kevin Kaiser but by demonstrating factual errors.
    26 Sep 2013, 03:34 PM Reply Like
  • Be here know : you are correct. While pipeline safety and maintenance are critical issues that need oversight, reputable companies like KMI, EPD are 2 examples of companies that annually expand their infrastructure, add new pipelines and have safety and maintenance in their budgets. I think they realize that if major problems occur it would be devastating to their companies. For these reasons I'll side with Kinder and his reputation over Hedgeye and really his lack of any proof in his irresponsible speculations on great American companies.
    26 Sep 2013, 05:08 PM Reply Like
  • The best study of this information is the analysis that Kinder publishes in the analysts presentations they provide. One thing they forecast and they are rarely wrong on this is that the dividend will go up by at least 5 % next year. Possibly 6%. Kinder will announce that around the 1st or second week of December traditionally. The payout will go from 5.33 to something like 5.59 or 5.60.
    If you pick up KMR at 75.00 that is a 7.5% return. but the leverage on that actually is closer to 9%. On KMR you do not pay taxes until you sell it so the cumalitive effect for long tern holders is quite high.
    It is also the best vehicle ever to hold if you are like Be Here Now as you do not every pay taxes on it if it is an estate type holding.
    26 Sep 2013, 05:09 PM Reply Like
  • how much short selling did the hedgeeye groupies do with the release of their impressions ?jfc independant investor
    27 Sep 2013, 12:42 AM Reply Like
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