Fri, Oct 24, 2014, 10:46 AM EDT - U.S. Markets close in 5 hrs 14 mins


% | $
Quotes you view appear here for quick access.

Kinder Morgan, Inc. Message Board

  • not_totally_gray not_totally_gray Sep 5, 2013 12:15 PM Flag

    Morningstar reply

    Wide-Moat Kinder Morgan Under Attack; Looks Like a Buying Opportunity to Us

    Kinder Morgan fared poorly Wednesday following a press release from research shop Hedgeye, which said the firm "may be a mere house of cards, completely misunderstood and mispriced." Investors paid attention, as Hedgeye's analysis of Linn Energy earlier this year led to a 30% drop in Linn's stock price... For the most part, we view these topics as old news and stress that we're talking about a group of companies that operate the nation's largest pipeline network, generating north of $5 billion in EBITDA from tangible physical assets. While we always welcome critical analysis and questions to the give-and-take debate over master limited partnership valuation, we're skeptical of the claims Hedgeye is making and would encourage investors to take advantage of the sell-off to buy a quality wide-moat franchise on the cheap.

    Hedgeye's discussion topics, presented as "emperor has no clothes" bullet point teasers, include a critique of the role of crude oil production in Kinder's cash flows; questions around maintenance capital spending; the structure of incentive distributions; the complexity of Kinder's structure, with four publicly traded equities; the difference between the returns on equity Kinder shows in investor presentations versus actual unitholder returns; and questions on Kinder's tangible equity. Some of these are legitimate issues (several of which we've raised before); other points feel more like smoke and mirrors. We will publish a more thorough analysis following the release of the Hedgeye report, but in our initial review of these topics, we stress that Kinder Morgan is a stable, cash-generating machine grounded in hard assets that for the most part generate fee-based revenue. We are maintaining our fair value estimates and wide moat ratings

38.43-0.25(-0.65%)10:46 AMEDT

Trending Tickers

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.