It is essentially mute at this point. There is a consolidation going on. Buy KMI. It has been jumping around a bit but will be a safe long term hold with an excellent dividend.
Even if the Republicans win the Senate, our budget position remains in deficit and thus while they would make adjustments I doubt very much that it would amount to much in the long run. IMO and experience it is one of those uncontrollable issues that are best considered neutral across assets and are thus mute from the point of view of investment choices. Pick a good horse and take the ride. In the end you will be ahead of where you are. KM is such a horse and I was lucky to be in it before all this started and to load up while it was still depressed. Whatever the tax situation, oil prices, political and military issues ... KM is on friendly soil, in a needed and growing business and is run by the best ... what's not to like?
Indeed Tig, that is all true. I am just perplexed not to have seen any big players come in now that the SEC has signed off.
KM is made to measure for institutional money wanting a reliable, growing dividend stream and some upside. Given that so much is owned by RK and other insiders as well as many long time holders that aren't going anywhere I would have thought that the shorts would have been severely spanked by now as new buyers come in.
All the big volume days have been down days. I have been expecting a big up day on big volume. Maybe Monday.
$3 a year from the mid 40's seems reasonable as long as there is some real growth. However interest rates will start going up in year 3 or 4 and that will stop the advance unless there is corresponding real growth.
Whatever happens, I am happy to collect that sweet dividend while I wait for all the stars to align.
If you know him personally you need to be careful what you say. The SEC may consider you an insider. I have a friend on the board of a company in which I had stock. He begged me not to post at all and not to trade the stock in case a trade would be thought to have been initiated by something he told me. I sold it so no one would need to worry.
I doubt that anything of this sort would be in the cards for some years to come. By then tax laws will likely be different so it this is really just a pointless discussion.
The problem is that the muck the distillate is used to transport has a relatively high production cost. Tar sands are not wonderful in a low price environment. They need scarcity and that is not in the cards right now.
I guess the sellers have sold and the buyers have bought!
Where from here .... maybe nothing until OPEC meets even if it has little to do with KM's revenues (in the short term, at least).
My understanding is that they have all the big investors in the bag. The vote is IMO a formality.
The low volume was not what I expected. All the high volume days have been negative. I was hoping a high volume up day to confirm a positive trend.
Not getting it yet.
Spiral: I feel bad for you. You're the kind of dude that uses their personality for birth control.
No reason in my mind not to. It is not like a tech or biology (pharm, biotech, specialty chemicals) or some other businesses that can come up with something special, gear up and multiply their sales and profits 20 fold in two years and go from 20 to 300. It also won't fizzle.
It is a perfect core holding.
Get your excitement elsewhere.
That seems reasonable but it will depend on interest rates. If the yield on the 10-year would be at 5% there is no way KM's share price would hold up even if the revenue stream is safe.
WZ: As you and those that read these things know, I am a big fan of KM and am loaded up to my ears in it. The idea of KM's stock price and dvd doubling over the next 6 years to me is a stretch regardless of where oil/energy prices go. This is more like a dynamic utility and in many way it has similar qualities. It is highly capital intensive and provides a base of 'routine' revenues that will continue almost indefinitely (or indefinitely for some one my age). Growth comes primarily from added capacity and improving capacity utilization as contract prices are unlikely to change relative to the price of everything else.
This represents something of an impediment. They can buy other pipelines of course but that will require dilution or debt and thus the only real benefit to us would be if KM can more fully utilize the new asset. Building is going on especially on the gathering end but expansion into areas with new customers is slow and difficult and will take some time. The third major issue is interest rates: As borrowing costs increase our debt load becomes more of drain, new capital projects become more expensive (and dilution becomes more attractive) and, even if they can maintain the dvd, it's relative yield will drop which will affect the share price.
There are things that can goose it up. LNG exports will help, higher prices (their enhances recovery business) and the like but it won't really change the game.
My objective with KM is as a stable core holding with reliable income. I believe it will find it's equilibrium price based on yield somewhere in the mid 40's and that will fluctuate based mostly on relative yield and interest rates. I am sure this will become a core holding for pension funds and the like but I don't expect fire works.
You nuts? Why would you write a call on a stock with a future that has been recently depressed. The only time for me is if I think it is fully valued already but I don't want to outright sell it. Then sell high enough so that you would have sold anyway.
Not only can you hold it but KMI is a very suitable long term core holding. Just let the dividends reinvest. It is All North American, utility type cash flows, not very dependent on oil / gas prices, virtually a collection of mini monopolies.
The only thing I would keep an eye on is leverage and interest rates. If both interest rates and leverage get too high at the same time, yield could be harmed. It would still be relatively safe but it would bring the stock price down for a period. It would certainly not ever be permanent but would make it vulnerable to take over.
Great choice ... we are only at the beginning of the process of building out our energy infrastructure. Over 20, 30 or more years you could do very well.