I agree. It has everything to do with their stance on Syria and their support of Iran. Nevertheless I am certain that it was not lost on Soudi that the very same activity might retard the growth of American production. It is true that Mr. Putin was looking altogether too aggressive in eastern Europe and generally world wide (Middle East, Scandinavia). Mr. Putin needs to step back or be relieved of duty before the pressure will be reduced. The Chinese have clearly made a side deal with Putin on energy so we will see how that plays out ... it could prolong everything, although I doubt that the price is high enough to displace much of the loss that lower oil prices are to their budget. My guess is that the next step may be to provide some sort of protectionism for North American producers. Perhaps a $10 / barrel import tax would be all it would take. It would affect less than 5% of our consumption because Canada and Mexico would be exempt.
Just a thought, I don't believe that this will last too long.
No, your cost is derived from the cost of your KMP shares. My cost basis is wrong as well. I emailed and they will correct it when the data is in.
KMP was not sustainable. Think about the value of KMI in terms of the guidance we've been given regarding dividends: $2 next year is 5% at today's price, we will have 10% dvd growth going forward. I believe Rich Kinder because his skin is in the game with us and much of their revenue is based on contracts that remain in place for long periods. Current prices are unlikely to last more than a few months and should settle north of $70.
My belief is that KMI will be bid up to a 4% yield if interest rates remain low (which they are likely to do). Thus my guess is that the next 18 months or so will yield 20%+ between the dividend and appreciation .... or at least that is my expectation.
More than that it isn't involved outside North America so there are no political concerns or currency issues of any importance to worry about.
With commission your cost is very high. My methodology is to add 15% to my position ONLY if it can bring my average cost down more than 5%.
You would be better off with EOG, Continental or KMI.
Abandon this trade and buy those and let the position you have play out.
Lol .... good point. They do seem to identify with the crane business. I think these assets are both worth a lot more in better hands. Preferably separated.
Please consider the big picture. Oil will find equilibrium and it will likely be north of $70 because too many producers will be stressed at these levels and one thing that saudi don't want is for OPEC to collapse. At these prices 4 members are severely stressed and others are in trouble if prices remain here. KM is strong in a stressed marketplace and will benefit by adding good long term assets at bargain prices.
I also have a big chunk of my $ in KMI albeit at much lower average cost. I will reinvest dividends and expect it to do very well going forward.
We will get 5% next year at $40 so there is no reason in my mind for someone not to add now ..... I did reinvest the proceeds of some call positions I closed.
Ohhhh, Chicken Little, INDEED the sky is falling... Please go buy EPD and take you negativity and myopic hysteria with you.
Another good move! At 70 he can't have the same energy as in the past. Handing off day to day management is smart. Now he can focus himself of what I believe was the purpose of the consolidation: Taking km to the next level. I would not be shocked in the least to see him gobble up production and refining along with the pipelines.
I'll be along for the ride ....
I'll have to dig a little deeper. Time will tell. I added today and brought my average down considerably. I believe that there are too many producers that run into trouble at these prices and that pressure will build for saudi to cut back or have OPEC disintegrate. Russia has clearly made a side deal with China but I would bet that the price is far below where it would need to be to support their budget. Domestically (N. America) I think we need to find a way to support production from a strategic point.
Thanks for your response.
Remember that a lot of equity is held indirectly in funds and etf's and so when the sheep run, everything is sold. It happens over and over. Buy low and wait ..... I have no idea how long it will last but it never does.
You would think. I know several big brokerages have them on their 'A' list. There is a lot that could change the picture so they're probably holding back on projections. It isn't hard for me to see $50 18 months from now and north of $45 by October next year but who knows. There are huge changes in the world energy markets that need to play out.
You could buy $40 calls for July or something like that. Chances are it will run away from you. Stocks like this are likely to become a darling of the income crowd and once they bid it up it will stay there. It's all about IRR (internal rate of return). If you cost is much below this, selling incurs taxes and then you need to replace the investment ... there just isn't anything that will give you earnings at that rate to replace it with. (if your cost is $30 then next year's IRR is 6.7%, if $25 then it is 8% and so on.) Think hard.
I am not sure at all what is going on. It could be $ being diverted to cheaper producers, it could be the new bug LNG deal, tax issues, adjustments still being made from the conversion, people who jumped in when it was in the mid $30's taking profit because of what is going on in energy .... or all of those things.
Diane is right, if you need to sell then tomorrow will likely give you a $41 handle or close (you could place a limit order and see if it gets hit).
The thing is that there are so many forces at play in the world right now. KM is all North American, it is slap dab in the middle of our new-found energy revolution (that is central to why energy is going through this upheaval). Rich Kinder is the cream of the crop in the midstream business and cares about his shareholders. So, I guess what I am saying is that KMI is the sort of company that you use as a cornerstone of your portfolio. The dividend looks safe as does the projected dividend growth. At $2 next year you already have 5% at today's price and my guess is that the dividend alone will push up the price to a yield of 4% or less over the next year as the clouds clear. That would take the stock price into the high 40's.
I guess what I am saying, along with Diane and others is to sit tight if you can, you won't likely be sorry if you did.
I am not so sure. Perhaps I'm missing something but their payout ratio is already very high and ROE is too low to possibly maintain the dvd as it is. Am I missing something? I am a shareholder and added yesterday but it looks to me like something has got to give ....
Sadly it would not have continued anyway. Growth was becoming difficult under the MLP structure. Indeed the dividend is smaller but respectable and the dividend growth will be good. There are other MLP's that offer a little more yield.
There are a lot of forces in play and I'm sure all the things mentioned by others are in that soup in one way or another. If you put KMI on a chart with any other energy related play it looks great. $2 next year will help keep us up. IMO regardless of what happens right now, long term we're good. Just hang in and ride it out.