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Linn Energy, LLC Message Board

  • harehau harehau Sep 4, 2013 11:50 AM Flag


    Would like to see Rich Kinder crush these guys. Maybe he should take it private again. As a knowledgeable investor, you don't have to respond. I heard the same thing about Kinder more than a decade ago, and you would have made several times you money.

    Kinder Morgan, Inc. (NYSE: KMI) declined on Wednesday after Hedgeye analyst Kevin Kaiser recommended shorting the stock. Kaiser called the company a "house of cards," that is misunderstood and mispriced. He foresees a "collapse" and plans to release a full report on September 10th.

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    • Hedgeye is the dog that is about to catch the car. I doubt that they are going to actually publish a negative article about KMP they have to know that every professional analyst with all the major financial institutions is getting ready to rip their piece to shreds soon after it would be published. My bet is that they "DELAY" their release.

    • Morningstar response:
      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 and the launching of an informal Securities and Exchange Commission investigation of Linn's hedge accounting. Hedgeye won't release its research until next week, but cited a handful of topics it will discuss. 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

    • harehau,

      I bought KMP and KMI back in the Enron collapse time frame. They tried to label Rich Kinder as an fraud. Yes, he was at Enron, he was even the President, and he more or less got pushed out by Jeff Skilling's asset lite strategy of making money off the trading book and trading desk. Kinder preferred the pipelines and thus he and Bill Morgan bought the GP (along with First Union backing) of the then tiny Enron Liquids Pipeline (ENP). That MLP became KMP. They bought Sante Fe Partners and KN Energy (using a reverse IPO of the GP to create KMI). It is only coincidence that Encore later assumed the ENP ticker symbol. Kinder was attacked repeatedly and did nothing but keep growing his pipeline network. He finally made dough head Kurt Wulff walk away after years of Wulff calling it a ponzi scheme.

      Kinder made me a fortune. So did Dan Duncan. I made so much money on Kinder and Enterprise and while I accept that I will likely never see that kind of appreciation out of KMP(and the first incarnation of KMI) and EPD(and EPE) I refuse to sell them. I keep collecting huge distributions every Q, both in nominal terms but also relative to the size of my original investments!

      Kinder and Duncan made the MLP universe what it is today. They were the pioneers and you could argue Duncan actually saw the light first by eliminating the GP (Incentive Distribution Rights).

      I laugh at anyone that thinks they can attack Kinder and win. He's way smarter than anyone can imagine, and a micro-manager that knows alll of the numbers(trust me on this!). He is also great at spotting talent, but more than talent, he is great at spotting individuals that will work very hard.

    • One day, Hedgeye will bite off more than they can chew and will get their collective peepees whacked!

    • Agree. What is scary is these clowns just took $2 off the market price.

      Interesting the richer short targets would have been the small production EPs and trusts without much coverage. Perhaps a bridge to far even for the Obama SEC?

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