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San Juan Basin Royalty Trust Message Board

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  • bocacerrada bocacerrada Feb 14, 2005 10:43 AM Flag

    KMI companys and McDep

    McDep has been trashing Kinder-Morgan forever, mainly because of the percentage of cash flow it takes as general partner of KMP, which is a master limited partnership. KMR is an LLC which holds units of KMP and distributes cash flow to shareholders. The main attraction of KMR is that it can be held in an IRA without any problems of unrelated business income. KMP and KMR have been excellent investments over the last few years. I hold KMP in a taxable account and KMR in an IRA.

    I've previously pointed out that KMI is primarily involved in pipelines, has almost no O&G production, and is not similar to any of the other corporations analized by McDep. I somethings wonder whether Wulff has a personal beef with Kinder because of Kinder's association long ago with Enron, or for some other reason. I have never understood why Wulff continues to report on the Kinder organizations, but never discusses any other MLPs or pipeline companies.

    I can understand the reluctance of some, like ic4x, to invest in MLPs. Their accounting is difficult to understand, they are a pain to deal with at tax time, and they are certainly not a venue for traders. But, I intend to hold KMP until the executor of my estate decides to sell it, and I am very happy with the returns on KMR in my IRA.

    Incidentally, I also own FUN, an MLP, in a taxable account.

    All of which is one man's opinion and worth what you pay for it.

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    • I want to respect the opinion of others about investing in Kinder Morgan partnerships ... but ... it still escapes why one would invest in KM stuff that yields 7% to 8% and has a strong sell rating and stern warning from one of the very best independent O&G analysts of the past 30 years (Kurt Wulff), versus owning Canroys where you can earn 11% to 14% or buying SJT (before this recent runup) where the yield is 10%+ --- and neither SJT nor Canroys have UBTI probelms when held in an IRA.

      Speaking of Canroys, I am trying to buy NAV Energy today (NVGUF), a 57% NG Canroy, their major hedges expired in Dec, right now yields 14%+ for American investors.

      • 4 Replies to ic4x
      • Why is SJT up today? Sales are down, price of NG is stuck. Is it just that the sector is popular or that valuations are catching up? I'm not complaining, but...

      • There is probably no poster on this board who is entitled to more respect than ic4x. His credibility is at the top of my list.

        I understand his distrust or disinterest in MLPs, and it is certainly justified in many instances. On the other hand, my investments in MLPs have been driven primarily by tax benefits, increasing distributions, and stable cash flows. I hold KMR in an IRA for diversification, and because it beats bond funds for growth and income.

        And, I still do not know why McDep even bothers to do any reporting on only one pipeline company and ignores every other MLP in the natural resources sector.

      • My problem with KMP is I bought back in 1995 as El Paso Gas which became KMI. I am in @ $15.21 for 2,000 share. I have not calculated it, but KMP has returned most or all of my investment plus real dividends for nearly 10 yrs !! I would like to sell since its price has not moved up in the past 15-20 mo. But I would owe the IRS bundles !!
        I think I will let my 2 sons decide what they will do with it !!!!

      • ic4x - where can I find information on NAV Energy? It sounds interesting. Benign chart, though, considering how everything else has gone up so high. Any reason why?

    • Well said, bocacerrada! By the way, today was dividend day for KMP - nice! Divvies (distributions) have been going up regularly since I bought in 2-3 years ago or so at $28 when people were trying to tar Kinder-Morgan with the same brush as Enron's. I don't think I'll ever let my shares go, either. I think Wolfe does compare apples to oranges on this score. He doesn't seem to understand that it's a pipeline.
      Wolfe - okay. I have to credit him elsewhere. I'm so far up on COSWF since I started buying @ $30! I'm not going to ignore his other advice when he talks about subjects he understands.

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