Be fearful when others are greedy and greedy when others are fearful.
They aren't concerned with the next week, quarter or year. The products KMI transports are all necessary for this country to function. Yes, volumes may be down for a while, interest rates may go up a little but reinvest dividends and in a few years when the smoke clears you will be rewarded. Minimal currency risk, not exposed to the political winds in some foreign country, long term energy demand will continue to go up. RK is one of the best in the business and his money is right in there along with ours and he works for us for free.
Sds.... That is the point. These are long lived assets and their necessity is irrelevant to short term profitability. Indeed there are times where things will be difficult and then a new cycle begins and everything is good again. Remember that these assets are also essentially 100% domestic and dollar neutral and are essentially utilities. Barriers to entry are also incredibly high. But just like utilities there is a sensitivity to interest rates and fluctuations in the price of inputs versus the revenue they achieve. It doesn't mean that they're going anywhere.
Indeed coverage is looking slim and relief does not look to be in sight. Nevertheless capital spending is subject to a hurdle rate that is a net positive so even if they do dilute us a little at some point, that dilution will be a net positive.
There's too much griping. The realities are the realities and to criticize RK endlessly as if there was a roadmap of the future lying in his bottom drawer and he just didn't bother to consult it is childish. Our money is in there along with ours and he runs the company for us free of charge. This period of difficulties will brings challenges but it also brings opportunities.
Tig: He is a manager, not a fortune teller. Yes, things are tough right now but NG is half the business, refined products another big piece, terminals, storage .....
We will not be reducing our use of these products and transporting them will be necessary for the foreseeable future.
All of you that can't take a little heat need to get some perspective. In the mean time those of us that sit and reinvest dividends will make out eventually.
I agree completely. I reinvest dividends and in 5 or ten years we will see if it was a smart thing or not. These are hard assets transporting necessary commodities not some internet fad that might fall away when the next big thing comes along.
Same thing happened to me. No excuse! Even though I have listened to the last umpteen CC's and they must have my email address in their database.
Oilman: Indeed, the range kmi's share price has been nothing short of crazy. Nevertheless, if one looks at it in terms of the various 'sensitivities' intrinsic to KMI it isn't such a surprise.
First of all the volatility of the overall market accounts for much of it. Second, the uncertainties about interest rates (even if unfounded), third, oil price fluctuations and the uncertainties that brings for producers certainly impacted the perceived quality of earnings, even if contracts 'protect' the revenue stream. Add to that a restricted float (RK and other long term insiders hold a big chunk of outstanding stock), ETF's where a sell includes both good and bad stocks and is subject to the emotions of less experienced stockholders, the degree of leverage in the market, and, and, and ....
If you take a more nuanced attitude, this offers opportunities. The truth is that half the business is NG which is growing and will certainly continue to grow and transportation assets associated with it will benefit. Another big chunk of the business is the transportation of refined product and no one would suggest that we will be using less of that. Then there's the terminal and storage business and the tanker business ... all of which are unlikely to see themselves displaced in our economy any time soon. Yes, CO2 is struggling, there are questions as to the short and medium term viability of tar sands but at the end of the day, those of us that look longer term will not be deterred even if we understand that things could remain volatile. Dividend investment has more than 1% to my share count every quarter and sometimes that buy will be cheaper and sometimes it will be more expensive. My position is part of a diversified Pf and in four, five, six or ten years we can all tally up and see.
My money is safe alongside that of RK. He is one of the best in the business and works for me (us) for free. Nothing in life is certain but one thing is ... there will always be noise.
Wiz: You seem to have an axe to grind. If you don't like the stock, that is your right. But don't you have anything else to do but regurgitate the same material day after day?
KMI is most certainly operating in challenging times in a challenging industry and there is little real visibility as to what the future holds. Nevertheless we have one of the 2 or 3 most respected people in the industry running the company for free with his money right in there along with ours. Hardship might just bring opportunities and no one is going to stop using NG, oil or refined product any time soon.
Nothing in life is certain except taxes and ultimately death thus no one should have their whole future riding on KMI or anything else for that matter. For me and many others who know the risks, KMI is still a worthy long term bet. Others don't agree .... that's what makes markets.
Doggy: You clearly have no clue about the middle east and the assorted interrelationships. What you suggest proves that.
The Russian economy which is in recession at the moment and all their commodity businesses are in the toilet. Don't you think oil would already be at $80 if Vlad controlled it? His only impact would be to stop pumping all together or somehow inhibit Saudi from producing.
I think what we will discover is that Saudi is reducing supply on the DL. The payback to them of raising the prices into the $50's from the $30's is well worth a 10 - 15% production cut. They know there is more supply on it's way .... everyone needs money and if oil is allowed to fall too far their budget would be shot and limit their ability to do what is necessary to keep prices up.
When you allow the market to shake you out sometimes you need to justify that. It is true that we have been through a perfect storm but given that the transportation of these products is necessary and that pipelines are the cheapest and safest way to do that, cash flows are likely to continue. Plus we have one of the best in the business running it for nothing with his money in the same basket as all of us.
I haven't been reading or writing much on this board lately. There was just too much bull to wade through along with people with personality disorders getting attention because no one else in their lives will give it to them.
What a stupid statement to make .... if a company can employ capital (regardless of it's source) at a rate higher than it's cost then it should take it.
Internally funding growth limits growth to free cash flow .... stupid.
You are exactly right. Look how winners like Apple sold off. There's deleveraging and cash raising going on. More than that it the ETF tail wagging the market. I am always a buyer when this is going on.
Not sure it is completely over ... the next 3 weeks may offer a 2011 type opportunity.
The BS got old. Today was the first time I had read anything here for months ... and it may be months before I do so again. :)
Quite a change of heart, Wiz. I hedged a little and sold a little but have bought more. The thing you are missing is that this is necessary infrastructure and will have high capacity utilization throughout most of the system regardless of the circumstances. Yes, we have had a perfect storm and perhaps the expected dvd growth with not materialize and the current yield could conceivably get cut, nevertheless RK and KMI are a known entity to all of us, it has no foreign exposure and is not directly subject to much in the way of currency fluctuations. It also has several large projects in the works and transports 1/3 of the natgas in the country. So, whatever happens, happens. I will continue to own it and trade around my position in order to get my average cost down. KMI income is more sensitive to interest rates than it is to commodity prices. The Fed will likely raise rates some time in the next 6 month but there is nothing to suggest that rates will go up by very much at all in the next 3 years at least. Indeed the rest of the world are still cutting and if we push our up too high the US$ will strengthen further and clobber our exporters.
So, be negative if you choose to be but try to maintain some perspective.
Sentiment: Strong Buy