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Kinder Morgan Energy Partners Message Board

  • seebelow561 seebelow561 Jun 28, 2013 2:46 PM Flag

    KMP/KMR% vs EEP/EEQ%

    With the understanding that KMP is to KMR exactly the same as EEP is to EEQ, why does KMP trade at a premium while EEP does not, or conversely, why does KMR trade at a discount while EEQ does not?
    EEP/ EEQ trade at about the same price and at times in the past year EEP has been higher than EEP and at other times EEQ has had a higher price than EEP. I conclude that over a long period the average share price is nearly identical. Over the same time KMP has always traded at a premium over KMR- as little as 2% lately ( a historical low premium) and as much as 10% or more at other times.
    Skipping the debate on why KMP trades at a premium, why does KMP trade at a premium while EEP does not?

    Sentiment: Strong Buy

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    • I checked and EEP/EEQ pays its distributions about 14 days after it goes ex. KMP/KMR pays its distribution about 20 days after it goes ex. They both use the average price of KMR/EEQ over the 10 days before going ex to determine the number of shares distributed.

      Other then that, and the liquidity of the KMx family being somewhat larger vs the EEx family, I don't know the answer...

      • 1 Reply to neutralid
      • McGill (EEP/EEQ) worked under R. Kinder (KMP/KMR) at Enron. Likely McGill set up the structure of EEP/EEQ from Kinder's playbook.

        To speak to the premium/discount issue between the two, while few people probably know for sure and it has been discussed for years on these boards, perhaps the fact that EEP/EEQ has not had the price appreciation that KMP/KMR does is a factor. EEP/EEQ has been range bound for a few years, even after their split.

        I'm no analyist and do not know if the discount of KMR ends up to be equal to owning KMP in the long run, given the fact that KMR yields more shares. I hold KMR in a taxable acc't.with a small position in an IRA.

        Sentiment: Hold

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