A 2012 PR announced a partnership with a small distillery that would distill and age Sam brews set for release in 2015. Anyone know if this came to market, and or tried it? Also A Nov 15 Boston Globe article on a co- founder that also has a collaboration with Sam to distill rare brews into whiskey's.
Just wondering if Sam is going to jump into craft spirits by buying one or both of these distillery's? The background of the new CFO suggest broader investments.
if BNSF is the model for Buffet to purchase this then take look at his BNSF deal to compare. He paid roughly $26bil for the 80% of what he didnt own. Paid $15bil in cash and $10bil in stock. the following years BNSF grew and improved operating ratios. It has since paid over $17bil in dividends to the parent...covering the cash portion of the deal. But the dividends were largely funded with debt. BNSF had debt capacity to kick cash returns to the parent... an item KMI lacks.
It's best not to listen to what Goldman says but pay attention to what they do. And what they did was sell their stake into and after the IPO a few years ago in the $30s.
Interesting that even after slashing the dividend by 75% management still wants the public to use DCF as the proper metric, particularly their numbers. These guys want to tell you that maintenance capital is strictly fixing leaks and replacing worn valves but in a world where reserves deplete, and new technology changes economics of others the movement is as ever changing. Like all business's maintaining share requires a necessary cost. You wont see "through put" share gauged in annual reports but that's the goal otherwise they would not defer the dividend for "growth" opportunities...Anyways in the long run a stock always drifts towards its intrinsic value.
I heard recently that the 40 year average yield on the 10 year is 6%. And that's with the past 15 years of sub 3.5%. it can be debated all day if the move towards hihger yields in underway. But higher rates for KMI and the like are a two-edged sword. First, the future cash flows are discounted at lower multiples, and second, rolling over debt at higher rates puts further pressure on cash flow.
I just spent some time doing a little DD on this and think I'll take a pass on this for now. You can SIMPLIFY to get a rough free cash number put a few different discount rates on it and conclude that there's not a lot of margin of safety.
i highlight "simplify" because after listening to CC's and presentations I get a sense that management isn't comfortable with simplicity. maybe it doesn't make the numbers work? I mean besides their constant telling us that DCF should be the proxy for free cash flow - the CEO states that their "growing" in a bad year, but fails to say that it's driven by aquisition, or the CFO saying that change in revenue isn't a good indicator of operations?...
i'm not sure if the retail brokers upped the rate but after seeing some of the blocks move yesterday I thought that maybe Kinder was getting the call. I find it hard to believe that his stake that generates $450M/per year isn't borrowed against anything - more KMI, real estate, land, art... Maybe it is and has not hit the threshold. But if he isn't levered, and has the same confidence in his company as he has in the past, he could buy into this decline in a major way.
Big blocks are moving fast at multi- year lows.
i think CHK SWN and CNX would make an interesting bet going forward. All three have been beaten down further than the industry due to leverage. Creating a port of 1/3 each might not be a bad idea. If one fails you could still do ok because the 2 would likely double simply by survival.
I think that after the roll up it has been easier for the market to detect the problem. A firm with 3% ROC that wants to grow at least 6% already has a reinvestment rate that's upside down making the growth entirely financed - which so far the capital markets have delivered. So one question is without the "growth" where does this stand on a valuation basis? Not good IMO - ~$3.5 cf/ 9.5% wacc = $36.8b, less than the $42b LT debt.
Hey Joe - Fellow long here as well. Don't follow it closely but its nice to see that operations (combined ratio) are getting better. On the inv. income side I see around ~2.3% off $4.5b looks like the safety of AAAs and Treasury's is the primary investment choice. Maybe better operations they can widen the investment yield. Also I wonder if the 2020 2% convertible notes might be a temporary overhang on the share price?
You make interesting points, but madoff? When his scheme came to an end there was something like $3 in assets per $100 from investors. Anyway's this, on the other hand, still produces cash from legit operations. With that said there was a time when if KMI dropped significantly (mostily prior to the LBO) it was time to add. Now I'm not so sure. Back in the day when the KM complex was smaller it could do finance projects that would add synergistic value to existing assets, almost a $2 for $1. Due to size and diversity that intangible has eroded. Size is a big factor here. To attain 10% growth they have to pump in roughly the entire enterprise value of what this complex was 7 years ago. I agree that maybe the financial model is busted. When weighing projects IRR to cost of capital the impending growth rate looks closer to zero. So an extremely leveraged non growth equity could lose chunks of "DCF" with a moderately escalating credit cycle.
Funny that these ceo's who apply extreme leverage, use aggressive or questionable accounting,, or whatever it takes to get a quick run up often use a huge chunk of their stock as collateral. Then when shtt hits the fan their out via margin. And they almost never buy back. Not even a small portion.
I think that maybe KMI (the GP) investor feels the same as well. The roll up abolished the high split IDR which was really an infinite ROC. And it also moved billions upon billions of debt unto the book.