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Kinder Morgan Energy Partners Message Board

  • pe5k pe5k Jun 4, 2012 1:23 PM Flag


    I'm doing my due diligence on MLP's in general and KMP in specific. KMP is a great income producer. I've been reading all your comments (lincolnpark is very helpful). I've funded my Scottrade margin account, and am ready. Here's my plan, I see an overall downward trend for KMP (punctuated with 1 or 2 up days). I think a good entry point is $70. So, if it hits that price, I will buy 1000 shares. If it goes to $65, I buy another 1000 shares. If it hits $60, I buy another 1000 shares. If it does NOT hit my price targets, I will NOT buy and will NOT sweat it. My overall investment will be $195,000 with a break even at $65/share. I think it is a safe plan with good entry points. What do you all think, is this a good plan or a bad plan and why?

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    • I buy 3-5 units of an investment 1 or 2 units at a time. KMP is well within my buy range. It is your money, so if you can do better than current market prices, this reduces your potential risk and increases your potential reward. I'm close to pulling the trigger on KMR since it is now "yielding" 7%.

      • 2 Replies to lincolnparker60614
      • I already have a fair amount and starting averaging down today. No one knows where it will stop declining but it is irrationally following the price of oil. Its revenue does not depend on the cost of the product in the pipeline.

      • lincolnparker, thank you for your reply. My risk tolerance is very low, so I'm questioning whether I should even consider KMP. BUT, CD rates are SO bad, and have been for SO long, that I'm being forced to consider other means to increase my cash flow. KMP is what I consider a "safe" investment (if that is possible). I can see that KMP is under pressure, I can see people are selling, so I'm looking for a good entry point. Because my risk tolerence is so low, I think that I'll only buy 500 shares of KMP @ $70, if it gets that low. I'm also looking at LINE, EEP and ED (ConEd). I think that I'll only take small positions in these stocks and hope for the best.

    • buy @ 65 then if it drops avg down.

    • markramey Jun 4, 2012 2:11 PM Flag

      Not bad if you can enter at that price. Even better would be to sell a JAN 2013 PUT at 70. Pays $3.85 per share at present. In other words, if you sell the PUT you agree to buy 1,000 shares at $70.00 per share between now and JAN next year. For this agreement, you will be paid $3,850.00 right now. If you get assigned before then, your net cost is $66.15 per share. If KMP is above that price in January, you won't get them. You keep the $3,850.00 either way.