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Kinder Morgan Energy Partners Message Board

  • NORCROSS2 NORCROSS2 Jun 15, 2012 11:50 AM Flag

    Why does KMP look like FB

    The Facebook IPO disaster resulted from being over-owned by shareholders who were not willing to see their assets falling hour by hour. The daily opening action on KMP has been looking just like the IPO day for FB: an opening bid up then sell limit orders are hit and an overwhelming sell spiral follows. It seems a lot of shareholders are distributing their shares. Has the stock been over-owned since the deal to acquire El Paso? Long time holders of KMP are now in bed with El Paso people who do not want to hold the shares. And since early May just about all the MLP stocks have been going through the same distribution of shares. Hard to watch while we see retailers like Whole Foods and Wal-Mart reach new highs nearly every day.

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    • Well, I would say now it is very evident who the sellers were in that down spike and selling going on throughout June in KMP. They were short-term sellers/traders looking to buy the shares back at cheaper prices and traders putting on shorts. Effectively these two types of trading have the same result. Then on June 27 the traders started buying back....a classic short-covering rally. Also the overwhelming presence of traders was shown by the fact that so many days before 6/27, the opening bids would put the stock up, then limit sell/short orders would be triggered and the price would plunge from there. Only traders would put on such limit order action. This was a surprise for me because I just didn't think that traders/shorts would have such an influence upon the stock price. So much for the "stock price=efficient market theory." just not so and the same goes for mlps.

    • correction on those profits for the old Fairfield. It was not $50 obviously. It was about $50 million, a pe of 5. And Wyndham(previously Fairfield) runs their operations pretty much the same way that Kinder Morgan does: the old fashioned American way, with continuously rolled over debt (my father ran his business that way too and he did well. Then he sold out and retired on it. I am part of the new way: no debt unless my credit card company gives me temporary 0% interest). It is that huge rolled over debt that I think worries the analysts for Kinder Morgan. That worry was what caused the share price of Wyndham to fall to $3 in 2009. The analysts look at Kinder's financials and see that lack of cash reserves because of their heavy distribution to their shareholders and it looks negative. But AT&T runs things the same way and people just love the dividend and the stock.

    • <<The Facebook IPO disaster resulted from being over-owned>>

      A stylist I know asked me about FB. She said they made $1 billion. I asked her was that revenue or profit? "What's the difference?" she asked.

      for the quarter or the year? "I don't know." she said. This was played out millions of times across the world.


      I told her not to trade it. Was interesting when I returned to my barber to see the wonder in her eyes.

      Too many people don't know they are rookies in many areas of life. They act like the expert and then, OMG, stocks can go down?

      You can almost always get into an IPO on the next big market correction, the first earnings report when "unexpected costs", "currency translation losses", "loss of a major account", "Europe", "China" -- I could build a Magic 8 Ball with these tired excuses.

    • <<The daily opening action on KMP has been looking just like the IPO >>

      Crude oil prices peaked at the end of February 2012 are are at lows for 2012. Kinder Morgan is the second largest producer of oil in Texas. Even MLPs that do not produce any oil are highly correlated with crude oil are down. Ditto for the oil and gas royalty trusts.

      Given you've noticed a correlation between FB and KM*, maybe FB produces oil? ;)

    • Alright folks, I was just asking a question. Who are the sellers? I did not mean to say that we should all sell. Sooner or later, the El Paso people will run out of selling ammunition and KMP will go back to being a proper dividend paying company. Same will be true for the rest of the MLP's. This selling will pass. KMP at a dividend rate of 6.4% puts it at a virtual pe of 16. That's fine.

      • 1 Reply to NORCROSS2
      • 1. Not an owner of KMP, KMR, or FR, but (and this falls into the category of "words have meaning") it's my understanding that (and I could be wrong) KMP "distributes" "distributions", not "dividends", so KMP can never "go back" to being a "proper dividend-paying company" - it's a partnership, not a corporation. KMR IS a corporation, KMP is a partnership.....
        2. Re: Facebook & El Paso (previous posting) - is "over-owning" a new investing term? What does that mean? Who were the original "owners" of FB,(prior to the IPO) and who did the buyers buy from - granted, I don't understand how IPO's work>)
        Not trying to be smart-aleck, just trying to learn...
        (here just as prospective buyer, but reading various posts here, it sounds like "greek" to me - the comments comparing KMP/KMI/KMP)
        .....Anyone?

 
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