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Kinder Morgan Management LLC Message Board

  • onefinehound onefinehound Sep 2, 2009 7:25 PM Flag

    no Aug divid?

    Haven't looked here for ages but....what has happened? no dividend?

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    • Reports on Distributions carried by Yahoo and others very unreliable with respect to MLP's. Have to go to company websites

    • I update my spreadsheets about every 6 months or so. I last did that in May of 2009, but have not up dated it since then. See my post (and the thread that follows it), starting at

      There was also a brokerage report put out in May by Wells Fargo (nee Wachovia) on the subject. I posted the summary of the report at

      There are some good comments in that thread also.

      I agree that the current KMR discount...KMR is 11.3% less than high by historical comparison. I am starting to wonder whether the world changed when the market collapsed though, and the "new norm" is a higher discount than the previous typical range. The discount got over 16% in December, which was really in the nutso range. Who a year or 3 we may look back and see that something like 11% +/- 2% may be the new norm.

    • I just want to remind everyone what I pointed out before: the general pattern is for KMR to eventually drop more than the dividend amount after the last day pre-x-dividend, at least for some period of time. In this case, it closed at 47.84 on 7/27. Dropping $1.05 means below 46.89, where it's been for most of the time since 8/6. This says nothing about the relation with KMP, but holders of KMP got cash and not unpredictably priced new shares, so again I think that must have something to do with the premium of KMP over KMR. That said, no reason to not expect a relative spike in KMR price as you get closer to the next x-div date, which of course would lead to a smaller number of shares being distributed. I guess that goes with the general idea that the market tends to extract the most amount of pain from the maximum number of investors.

    • Thank you for your analysis.
      I just want to add another angle:
      someone who has 10K to invest right now will get about 12% more shares by buying KMR; his dividend will also be 12% higher than the guy buying KMP. By buying KMR his return on investment will be significantly higher in the future, unless the price of KMP shares drops below KMR shares....

    • MWE borrowed heavily, doubling their long-term debt to facilitate CapEx, with reduced revenue. That trend can't continue and stay in business. IF they do pursue Appalachia exploration for NG, more CapEx will be needed, which means more borrowing (or stock sale) --- either one is dilutive and impacts their ability to continue the dividend at this level.

      They better pray for an extremely cold winter.

    • I really don't have any good answer to why the EEQ discount is so small, and the KMR one is large.

      Markets can be silly (thats an understatement !), but the EEQ and KMR discount story has been very persistent. It is hard to imagine the market is being so consistently silly.

      My suspicion is that it somehow has to do with the expectations of future growth of the distributions of KMP and EEP. I say that only because I see that as the primary distinguishing feature that is so different between KMR and EEQ. But I haven't been able to think through how this difference would play out into a different discount.

      The Wachovia article from May '09 on the KMR discount I referenced in an earlier post mentions the typically tiny discount for EEQ. This is the only article I have ever seen discussing the KMP/R discount at all, and Wachovia basically wrote "the EEQ discount is tiny, its weird KMR's is so large, and we don't know why".

      I'm open to ideas on this arcane sub-topic in the world of MLPs and their brethren.

    • Please, don't appologize and don't stop thinking out load. Your analysis is very interesting and thought provoking.

      Since my holdings are in an IRA, (that's where I've got money to invest) I'm not selling my additional KMR shares. How would the "compounding" of the additional units play out in your longer term (5+ Q) scenarios?

    • Levifan: You've hit the nail on the head! But, why is it so? Why should the market be giving KMR a larger percentage payout than KMP? Somehow the market is not figuring out that they are the same entity - or - maybe the market is telling us they are not the same entity despite Richard Kinder's assurances (and I'll ask again why he hasn't been supporting KMR as he used to)? We all know what happened to the efficient market theory in the last 2 years - and here we apparently have another example of that nonsense!

    • [warning folks...Abter is playing with his spreadsheets, hide !]

      You are getting at the key bottom line question: which has been better, KMP or KMR?

      I ran an analysis as follows:
      1) Purchase $10,000 worth of KMP and KMR at closing price on 1/3/206 (first trading day of 2006)
      2) Hold onto all KMR dividend shares
      3) For KMP, take distribution $$ when received and purchase more KMP units at close of payment date (no transaction costs).
      4) analysis all through 9/11/09 (this past Friday).

      The results surprised me.

      KMR: you now have 32.8% more shares then you have started with
      KMP: you now have 30.5% more units than you started with.

      So...the higher yield every time is working...your KMR # of shares has grown faster than the KMP # of shares.

      BUT (you knew this was coming)...
      Which investment has higher value?

      Up through September 2008 KMR was doing better the majority of the time. It hit an all-time peak on 12/17/2007 when the KMR investment was 7% ahead of the KMP investment ($13,125 for KMR, $12,258 for KMP).

      At the end of September '08 KMR was still looking good (+4.1% over the KMP investment).

      But as the overall market hit the wall in October, the "KMR discount" started to soar. KMP was getting hit hard, but KMR was hit worse. At a sharp trough on 12/10/2008 the KMR investment was 10.5% behind KMP. Both were still up from the purchase date, but KMP was at $12,375 and KMR at $11,082.

      Things got worse for both investments, hitting a low for this pair of investments on 3/9/2009. The KMR investment was under water ($9,900), and KMP was at $10,585. So KMR was then "only" 6.7% behind KMP.

      Since then both KMP and KMR have rebounded nicely. on 9/11/09 the KMP investment was worth $14,435, and the KMR investment was worth $13,525. So over this particular analysis period (Jan 06 to Sep 09) the KMR investor is 6.3% behind the KMP investor.

      It is worth noting that both have done relatively well through these very troubled times. The KMP investor has a total return of 9.95%/year, and the KMR investor has a total return of 8.18%/year. The S&P 500 was down 5.3%/year over that period.

      Bottom line: the rapid increase in the KMR discount in October 2008 has had a serious impact on the outcome for the KMR investor, and pretty much determines the outcome of the KMP vrs. KMR analysis.

      Right now KMR's price is 13.5% less than KMPs. KMR's price would have to climb to $49.66 for these two investors to be equal. $49.66 would be a KMR discount of 8.3% (KMP's price was $53.8 on Friday). An 8.3% discount is well within the historical normal discount range, but a smaller discount than we have seen since December '08.

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