Note the last sentence.
And finally, there are the Kinder Morgan triplets, Kinder Morgan, Inc. (KMI) and Kinder Morgan Management (KMR) and Kinder Morgan Partners (KMP), which fell 6%, 4.7% and 3%, respectively today. The reason for the drop: a press release from Hedgeye Risk Management, which called Kinder Morgan “a house of cards,” and said to expect a report on Sept. 10, explaining why. Deutsche Bank came out with its own note today defending Kinder Morgan, but the damage was done. Considering that Hedgeye’s Kevin Kaiser (and our own Andrew Bary) got Linn Energy (LINE) right, you can see why.
I love the way Barron's is proclaiming victory on LINE. Until the SEC finds wrongdoing, they cut the distribution, and the stock hits their $18 target, the jury is out. They may have won the battle but they haven't won the war. I hope Kinder takes them to the woodshed.
Hedgeye got lucky with Linn. If Linn's management had not completely dropped the ball and been completely irresponsible by putting so much of their capital into the Hogshooter, when they clearly had not proven it up and delineated it properly, Hedgeye would have been decimated.
But, as luck would have it, Ellis choked. He let his E&P basic instincts of grow at all costs to take over and also his desire to goose distribution growth when the company clearly did not have enough cushion and enough maintenance cap ex set aside. So, now Linn is behind the eight ball. With ethane rejection, high line pressures in the Permian, plunging natural gas realizations and dismal Hogshooter prices along with sub 1.0x coverage, they have a big hole to dig out of.
Kinder Morgan on the other hand has huge supporters like Fayez Sarofim. I think Kinder will move past this short attack rather quickly. It kind of goes back to the one or two times that Kinder and company directly confronted the clowns that attacked him. Mike Morgan (Bill's son and a former KM exec) gave his famous inaccurate innuendos speech that essentially destroyed Kurt Wulff and Melissa Davis (a paid shill) that were calling Kinder a Ponzi. Kinder loved to burn them on each conference call with his prelude into the Q&A "and now we will answer ANY AND ALL questions".
This Hedgeye development is quite interesting. I knew these guys were lucky once, but to take on Kinder Morgan is really foolish.
I've owned Kinder Morgan for over a decade and and more as a result of the El Paso deal. There is probably not a better manager, allocator of capital than Kinder, completely transparent. I heard the Ponzi accusations from Wulff over a decade ago and sold some units, worst decision I've ever made, although I put the money back into Enterprise Products, so it worked out ok. The infrastructure MLPs are not the same animal as the e and p MLPs. You can grow and pay a decent dist. KMI is a great buy at $35, probably won't return several times as it did over the past decade plus, but is still a double digit return investment. Too bad someone can't take Hedgeye down, they are not what long term investing should be about, agree, they got lucky with LINE, other things came together to make them look better than they are. I'm not even sure they understand the energy business.
RRB the racist screws up again.
Hedgeye got nothing right. Their house of cards was based on the puts and they did not envision the short fall in distribution coverage. 'It could go on for years'. Nor was the puts in the hedge book ever significant for forward cash flow.
If we are going to bang on management it is letting the ethane rejection not only impact revenue but reach a point where it interfered with production growth.
What also was required was the SEC taking a record amount of time holding up the BRY deal.
Plus the disappointment with the Shooter Texas.
Hedgeye and Barrons did successfully damage LINE with the short attack. Lynn management did provide the assist.
It is probable Hedgeye was already aware that Hogshooter Texas had dusted out. They got stopped cold by the BRY deal which the Obama SEC saved them from.
I love your little minor delusion of being a long term KMP and EPD owner. Something which was not created until just recently. After all the mystery mlp insanity from Lisxa.
A poster who still can not do the math or understand the key points suddenly discloses it owned the big mlp from the beginning!
The olb is very entertaining today.
As I said before we have any idea what LINE/LNCO are worth we need resolution of the SEC. Clearly the unit price remains 60% above their target after the worst news possible and management allowing the deluded clowns at Hedgeye make the real analysts look silly.
who are those guys? They didn't get anything right yet. They sure scared some people - and that is clearly their business model. Can't wait to see the class action suits start to hit KMP. They surely know how to avoid the scrutiny of the SEC because it is never against the law to express an opinion. I hope their clients buy into their nonsense. Ultimately, they won't have many but will they won't care because they will have a bunch of money in the bank.
The Foghorn Leghorn cartoon wearing a Yale cup; at all times, works.
Still a big toll collecting pipe mlp is an ambitious target for the parasites.
Not sure what the angle is. BUt given how secure KMPs cash flows are the angle is probably getting the discount between KMP and KMR to open up again.
Still this is not like the trading on non-public information and scamming short term price moves.
This is seeking to damage good American companies and they have one in the bag but the story is not over yet.