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San Juan Basin Royalty Trust Message Board

  • coach3play4 coach3play4 Feb 13, 2005 6:21 PM Flag

    KMI companys and McDep

    I know there are lots of KMx (ie KMI and the famliy) holders here who completely disagree with this analysis - hey thats what makes a market - but McDep really takes his shot on KMI today - gives his reasons to sell or short lots better than I can -

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    • Yesterday I posted about how frothy TELOZ was looking. Looks like some of the froth is being removed today.

    • I think they will declare around 22-24 cents, consistent with your prediction and more consistent with historical trends

      It may go down, but I think additional reasons why the stock has gone up lately are the Forbes and Barron articles.

      Either way, a drop will not kill you if you are collecting 1/2 - 1 percent a month in distributions.

      My two cents

    • I have no inside track on the dividend. I reviewed what McDep said and the very knowledgeable IC4X's prediction and found them reasonable. Last month's distribution (paid today) was very high due to a variety of factors, including the very high NG price when it was computed 2-3 months ago. In all likelihood, the one announced Friday will be .04-.06 lower. Others may disagree and I would welcome their input. While I trade SJT in my IRA (3 times successfully, this time so far not), I own a long term position in my taxable account and am certainly not trying to bash the stock. However, I know that Yahoo and similar services multiply the last distribution by 12 which makes the annualized yield seem significantly higher than it really is. Concomitantly, IF Friday's announcement is about what I expect, they will annualize that and Voila the yield will go down about 2% for anyone screening for high yield stocks. The other side of the coin is that energy stocks are trading on momentum and technicals and even a lower distribution may not have much effect. I happen to believe that it will. We'll know soon enough.

    • "I predict a sell-off of about 2 points when a significantly lower distribution is announced Friday."

      HP, why do you feel a significantly lower distribution will be announced ? I bought in recently and your comment scared me some ! Would appreciate your input. Thanks.

    • Cancerfighter--While I think it is overpriced, it is hard to ignore breakouts. All the energy stocks are breaking out, SJT is just following the crowd. You could buy in with a tight stop. My own approach has been to sell small positions and trade into BR as the stock rises.

      BTW thanks for the comments you offered on Flamel.

    • Don't feel too badly about selling early. I sold about 1/3 of my position in TELOZ at prices ranging from 8.40 to 15.18 thinking I could get in cheaper. Sold more this morning early in the 15.90's and the darned thing keeps skying like it pays a more steady distribution stream like SJT. Reminds me somewhat of the second and third tier tech/internet stocks in 99.

    • 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.

      • 2 Replies to bocacerrada
      • 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.

      • 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.

    • coach -

      What's a KMI? Please excuse my ignorance. ...just want to learn.


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