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Kinder Morgan Energy Partners, L.P. Message Board

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  • DONEDEALER DONEDEALER Dec 14, 2010 10:39 AM Flag

    On KMR board: LT total returns of KMP and KMR


    Your total return includes appreciation. But what relevence is appreciation unless the security is ultimately sold? Regarding the future, isn't there more likelyhood that the KMR discount will narrow rather than widen? I don't know why it exists and is much less for EEQ.
    With more closed end MLP's being formed and more ETF's won't these more sophisticated and yield hungry investors gravitate toward KMR?

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    • I strongly agree with much of what you wrote:

      "I don't know why it exists and is much less for EEQ."
      A small discount I understand, but not 10-15% at all. And why EEQ is actually selling at a premium to EEP totally baffles me.

      "...won't these more sophisticated and yield hungry investors gravitate toward KMR? "
      Agreed...sophisticated and yield hungry investors of all types (institutional or private) will gravitate towards KMR. I think to some extent that is why KMR's discount has dropped some in the past year, as it not isn't quite as obscure as it once was. KMR still flies under the radar of many folks because it doesn't show up on most yield data bases.

      As for total return (inc. appreciation); you are right of course, eventually it will be sold to realize the value. Perhaps I am fixated on my two major investing situations:
      1) At age 57 I want my IRA/401ks to have the maximum possible value in some undetermined future date, so I'm seeking total return between now and then.
      2) At age 94 my dad wants to maximize the value of his estate, also at some undetermined future date.

      Neither of us care about cash flow now, nor sale related taxes...its all about TR for us.

      I fully realize that this is NOT the situation of many (most?) KM* investors, and my own investing goals can lead me to have a quite different POV than others.

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