A stock split is like cutting a Pizza pie into smaller and smaller pieces without changing the size of the pie, or giving you anything of tangible value. Nothing is gained by a stock split.
A stock split, increases the total number of shares while lowering the price of each share without changing the market capitalization, or total value, of the shares held.
A Kmr stock dividend is paid to you by Kmp, and increases the economic value each shareholder has in assets, that produce future tax deferred income.
Stock splits have no economic value.
Warren Buffet wrote: “Splitting the stock would increase that cost (transfer costs), downgrade the quality of our shareholder population, and encourage a market price less consistently related to intrinsic business value. We see no offsetting advantages."
The Kmr distribution is not a stock split, it is not treated economically like a stock split. The dividend is as-if payed to us by Kmp, not split from Kmr.
"How do I figure the cost basis of stock that has split, giving me more of the same stock, so I can figure my capital gain (or loss) on the sale of the stock?"
Your cost basis has not changed only the number of shares. Whatever you paid remains whatever you paid for each lot, and its accumulated shares,
Unlike a split, Kmr shares Do have an economic value, and increase your dividend payout, and claim on income earning assets. That is they have positive cash flow right away.
I know what you mean about being overweight Kmr. The income treatment flows-through to Kmr shareholders. The dividends will get capital gain treatment if you sell. This will have no effect on price.
Could this be the reason?
Unlikely anything Yahoo says about the LLC is correct. Both Kmp and Kmr get the same income and have the same call on assets, but Yahoo shows Kmr as 0% yield.
How are these new additional shares created?
In essence Kmr shareholders receive the newly created shares from Kmp. Richard Kinder explains, search Youtube on my name, "Cashflow retained."
The issue of shares to Kmr is slightly dilutive to KMP. But KMP has so many more shares it is not a big deal on a per share basis. It is as if Kmr shareholders are being paid a premium to keep the funds in the company instead of partially selling out like KMP partners do every quarter.
Search on my name and The Intriguing Case of KMP and KMR ~ Bradford Cornell. I am sure you will be interested in what you will learn.
clydorn uses excellent logic about the discount, and I admire his sources. But Kmr is a holing company, also known as a close-end Investment company. It probably runs at a discount for the same reason most Investment companies have always traded at a discount. It has nothing at all to do with Kinder Morgan specifically.
KMP still has secondary sales to raise capital for our projects. We have a $14B backlog, half of it will be equity, half debt. You can count on plenty more shares of KMP being created.
You receive new paid up capital shares as if they were paid to you by KMP. Stock splits have no economic value. It a recent conference call that I have that piece of the call on my Youtube site, Kinder Morgan executives stated that the KMR dividend is not a stock split.