Seeking Alpha


Send Message
View as an RSS Feed
View katzm's Comments BY TICKER:
Latest comments  |  Highest rated
  • Kinder Morgan: The Sharks Have Begun To Circle [View article]
    Thanks, David. Of course, I think it's pretty important to keep our eye on KMI's $5.4 billion Trans Mountain expansion project and hope that KMI does in fact get the final decision to go forward from Canada's NEB by 4/12/16.
    Also, it sure would be nice to add the $2.9 - $3.5 - $4.4+ billion Northeast Energy Direct natural gas pipeline to the project backlog!
    And, it sure would be good news to hear favorable things about Phase 1 of the Residual Oil Zone (ROZ) / Tall Cotton project which would/could provide a future boost to the, hopefully, just temporarily sagging CO2 segment's distributable cash flow.
    I would also like to hear that Bakken shale oil production is bumping along alright and that KMI's 1/21/15 $3 billion acquisition of Continental Resources Chairman and CEO Harold Hamm's Hiland Partners midstream platform is meeting, if not beating, expectations, and is on track to be as successful as KM's May 2011 $920 million acquisition of midstream assets from Petrohawk Energy and KM's 5/1/13 ~$5 billion acquisition of Copano Energy which established KM in the prolific Eagle Ford Shale.
    Lastly, I hope that after May 24, 2017, Kinder Morgan will be able to reduce its leverage below 5x debt / EBITDA and make the company a strong BBB-rated credit. Between now and then I'm sure they'll spend up to the max either making accretive and strategic bolt-on acquisitions in this target-rich environment and/or buying up those outstanding warrants.
    Finally, I have a recurring fantasy, that Rich teams up with Warren to take out and carve up TransCanada to make Kinder Morgan THE North American midstream behemoth, and that Rich announces that he will be gradually selling his personal holdings to Berkshire Hathaway, with CEO Steve Kean and CFO Kim Dang reporting up to Berkshire Hathaway Energy's Greg Abel!
    Mar 26, 2015. 06:27 AM | 18 Likes Like |Link to Comment
  • Kinder Morgan: The Sharks Have Begun To Circle [View article]
    Yes, Rich owns 244,846,090 shares of KMI so he's got an incomprehensible ~$10 billion stake in his baby. However, note that the 2015 distribution will be $2 per share. So, he's also taking out $490 million every year, or $41 million per month, or $1.36 million per day, in distributions/dividends. So, on one hand he's certainly long the stock. On the other hand, he's certainly taking out a lot too (way more than I could ever dream of spending in several lifetimes) --- despite his oh-so-saintly $1 per year salary. He's pretty well covered whether this thing goes to great new heights, or goes the route of his former boss: he-who-shall-not-be-named ... This is one reason, I'd feel even more comfortable if Executive Management opted to shore up the balance sheet after 5/24/17 to at least a strong BBB rather than doling out every last dollar of distributable cash flow. I'm just saying . . . .
    Mar 26, 2015. 10:02 AM | 7 Likes Like |Link to Comment
  • Kinder Morgan: The Sharks Have Begun To Circle [View article]
    Berkshire Hathaway was not mentioned in David's article. That's just a fantasy of mine. Don't forget, on a PE basis, KMI ain't cheap, and Warren's a long-term "value" investor. Who really knows the true intrinsic valley of this country's/continent's midstream oil and nat gas plumbing, but I'm guessing it's durable and going to continue to increase over the next couple of decades at least.
    Mar 26, 2015. 09:19 AM | 3 Likes Like |Link to Comment
  • Kinder Morgan: The Sharks Have Begun To Circle [View article]
    While there's definitely some hair on it, and some debate-worthy concerns, here's maybe a couple reasons one might buy Kinder Morgan (KMI):
    Kinder Morgan transports more than one-third of the natural gas used in the US. Natural gas is the fuel of the future. It's clean(er), abundant, and domestic.
    Kinder Morgan transports one-third of the ethanol in the US!
    Kinder Morgan appears to be one of the only players on track to get its $4.5 billion Trans Mountain Pipeline expansion approved to help the Canadians get their oilsands bitumen out of Alberta and realize a market price for that landlocked resource! Our environmentally minded President can't stop the Trans Mountain expansion. The Conservative Party Prime Minister of Canada --- from Alberta, ahem --- should, hopefully, get his NEB to approved the pipeline by this time next year!
    Kinder Morgan's products (gasoline, diesel, and jet fuel) pipelines are vital plumbing for the fastest growing states in the US, like California, Las Vegas, and its Plantation Pipeline along the eastern seaboard rivals the Koch brothers (heard of those billionaire success stories?!) Colonial pipeline!
    Kinder Morgan is the largest independent owner of liquids (and bulk) terminals!
    Kinder Morgan's revenues are underwritten by long-term contracts with, hopefully, creditworthy counterparties.
    Kinder Morgan yields 4.88%.
    Insiders own a lot.
    Yadda, yadda, yadda.
    Mar 26, 2015. 10:00 PM | 2 Likes Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    You're comparing apples to pumpkins, aren't you? In 2006, Philip Morris was not a stand-alone company, but was part of Kraft, wasn't it? I think that if you want to compare apples to apples, you should compare PM after its spin-off in early 2008 with PM today, right? PS The "high level management" (CEO and CFO) that lead PM upon its split in 2008, left the building 1-2 years ago. And the former CEO's been selling his shares like a demon.
    Mar 5, 2015. 09:40 AM | 2 Likes Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    For about eight years, from 2008 - 2012-2013 emerging markets trended positively and were a tailwind for PM. Today, the US dollar is king, even with a $17 trillion national debt load. (By comparison, Japan looks like a basket case, and the EU's got troubles with unemployment and culturally non-tax paying Greeks, et al!). How long will the US$ remain the best-looking horse in the glue factory?! It won't be forever, but it could be for several years now, couldn't it? Meantime, PM's fcf is probably not covering its dividend payments, and its already heavy net debt load is probably increasing and its EPS decreasing with these fx trends.
    Mar 5, 2015. 08:59 AM | 2 Likes Like |Link to Comment
  • Kinder Morgan: The Sharks Have Begun To Circle [View article]
    And, that's including weekends and holidays!
    It's good to be one of the world's ~2,900 billionaires!
    But, seriously, I'd feel a little less squirrelly about KMI if Rich would simply pay himself in cash the same amount as say, the CEO of, say, XOM, and he really has to take the remaining difference between $490 million and the tens of millions that the CEO of XOM makes, that he take that remaining compensation in the form of KMI shares --- and keep incremental skin in the game! --- until such time as KMI achieved a BBB+ investment grade rating with, say, a debt to EBITDA ratio of something with a 4-handle and maybe added someone to the Board of Directors that wasn't a "buddy" from Houston or the Museum of Fine Arts in Houston, just to give added comfort to us non-billionaires and Texan Republicans. But, not to take anything away from the man. He's been a visionary and has built a tremendous enterprise, amen.
    Mar 26, 2015. 09:45 PM | 1 Like Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    That's a speculation, not an investment, I don't care to make.
    Mar 6, 2015. 04:57 PM | 1 Like Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    If Whole Foods in Chevy Chase accepted euros, I'd be a happy man!
    Mar 5, 2015. 10:10 AM | 1 Like Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    During 2011, 2012, 2013 and 2014, PM levered up by the billions to repurchase its own stock --- a tremendous tailwind! That was a one-time thing. PM cannot do that again. That movie is over. PM is unlikely to repurchase a single share in 2015. PM probably literally cannot repurchase a single share in 2015 without the rating agencies dropping PM down to BBB+.
    Secondly, during 2011, 2012, and 2013, foreign currencies were significantly stronger against the US dollar. Today, the US dollar is King. The Russian ruble, the Ukrainian currency, the euro, the yen, the Brazilian real, the Indonesian rupiah, the Turkish lira, even the Canadian and Aussie dollars are a multi-year lows against the US dollar, right?!
    And, yes, countries benefit tremendously from excise taxes on cigs. However, during the past eight years, excise tax rates as a percentage of PM's total revenues have increased from "just" 58.71% in 2007 to 62.84% in 2014 --- yet another headwind for PM!
    Mar 5, 2015. 07:46 AM | 1 Like Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    Should an investor be paying 19-22x earnings for a cigarette company?!

    Why ever would an investor "have to" buy shares of Altria or Philip Morris today?! I think investors should take to heart and wallet, Buffet's "no called strikes" rule of investing and wait for something to hit that's nice and easy and hanging right over the plate.
    Mar 5, 2015. 07:14 AM | 1 Like Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    I'd move to the sidelines and wait for a better risk/reward. Mitch
    Mar 5, 2015. 06:52 AM | 1 Like Like |Link to Comment
  • Philip Morris - The Last High-Yielding Tobacco Stock [View article]
    At $82.17, isn't PM trading at 19x ($82.17 / $4.32) this year's earnings?!
    Cigarette volumes are perpetually declining.
    PM's has successfully benefitting ~1.45 billion per year in pricing for the past eight years. Is that really sustainable forever?! Is demand for cigs really that inelastic!? Maybe.
    The euro has hit an 11-year low against the US dollar --- and the ECB's QE hasn't even begun yet!
    Does anyone want to bet on the Japanese yen appreciating?! I don't.
    The Turkish lira has now hit another new all-time low against the US dollar.
    The Indonesian rupiah is at a 17-year low against the US dollar.
    The Swiss franc has been decoupled with the Euro and has rallied.
    PM's net debt is higher than ever! From something like ~$6.5 billion back in 2008 to, what, ~$26.5 billion today!!!
    It's not perfectly clear --- and I doubt PM would ever admit it if it were true --- but it appears that plain packaging has possibly made a mess of Australia's tobacco profitability.
    And now plain packaging appears poised to breach the EU via the UK this year!
    The rollout of RPPs seems hopeful but maybe speculative as well.
    I see the high, attractive dividend yield, but is PM's fcf even covering the dividend?! I don't think so.
    PM loves to talk about its operating performance ex fx. Unfortunately, the translation of fx is all too real!
    19x this year's earnings for the weak-single A-rated world leader in cigs (Marlboro, Parliament, Virginia Slims, L&M, Chesterfield, Lark, Bond Street, Diana, Delicados, etc.) is starting to seem more and more speculative!
    Mar 5, 2015. 06:50 AM | 1 Like Like |Link to Comment
  • Eagle Ford Shale: New Record Set For Price Per Acre [View article]
    Why would BHP, who must know the acreage best since they're the operator, and who I thought has made noises about wanting greater exposure to North American oil and natural gas, have passed on the opportunity to top DVN's $6 billion for the total 82,000 net acres for this moderate risk development project that's going to drive returns in the high-teens to low-twenty percent? I guess the answer must be that BHP has higher hurdle rates for E&P programs.
    Nov 21, 2013. 06:10 AM | 1 Like Like |Link to Comment
  • Kinder Morgan Partners (KMP) -2.4% premarket after its $380M sale of the Express-Platte pipeline system to Spectra Energy (SE). "There’s a whiff of desperation about this deal," 24/7's Paul Ausick writes. "The sale seems to be an admission that Kinder Morgan needs cash and this is an attractive property that it can easily convert into cash." [View news story]
    On one hand, since KMP/KMR's two other co-owners --- including the Ontario Teachers’ Pension Plan Board and Borealis Infrastructure, the infrastructure investment arm of the OMERS pension plan --- are selling out their one-third interests to Spectra as well, it suggests that all three owners are seeing the acquistion price as attractive. On the other hand, I wonder why it is that the management of relatively small $17.85 billion Spectra Energy can figure out something more profitable to do with the Express-Platte pipeline system that Kinder Morgan wasn't able to figure out. Spectra must have some additional pipeline assets in their network that make this acquisition more synergistic to them.
    Dec 12, 2012. 05:30 AM | 1 Like Like |Link to Comment