(B)(N) KMI Kinder Morgan Incorporated

Deal Book. Kinder Morgan has entered the volatility zone (N) of rumours, news, earnings and analysts forecasts that can move the stock price up or down at any time by (typically) a few percent, in the same way that horses might jump at unfamiliar sounds before returning to the feed bag.

You still OK? Did you hear something?

And, indeed, it did jump minus (-6%) on Wednesday and Thursday last on a volume of about 40 million shares, roughly 8× its normal daily traffic, on a minor conjecture by an inexperienced analyst who thought that there might be a short opportunity (Reuters, September 9, 2013, Young analyst draws Wall Street ire taking on Kinder Morgan).

Mr. Kinder, who owns about 26% of the stock, also jumped, but the other way and bought up about 500,000 shares for $18 million to take advantage of the lower prices (ibid, Reuters).

But, Mr. Kinder is an investor with a commitment to the company, and the architect of a deep management structure in which about $90 billion worth of assets are held in a number of limited partnerships in order to distribute earnings to the shareholders before the tax man gets them (sometime later, but every situation is different).

The company has been in the Perpetual Bond™ since $30 in 2011 but we sold the last of our interest at $38 in June as the Risk Price (SF) jumped upwards to the current $39 and flat, not on news but new balance sheet information that did not support the demonstrated investor-at-large commitment to the stock which was trading at or above the price of risk and, now, was not.

Please see Exhibit 1 below, Red line Stock Price (SP) above the Black line Risk Price (SF) and for no other reason.

Kinder Morgan is expected to pay dividends of $1.7 billion to its shareholders this year for a current yield of an extraordinary 4.5%. Our estimate of the downside volatility in the stock price during the next several months is minus ($2.50), or 7%, so that we expect only that the stock price will trade between the current price of $36 and $34 to $39 without surprise, or anxiety.

For more on what risk averse investing has done for us this year, and our view of the whole herd and not just the odd loose pony here and there, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or for the real class action, La Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

Exhibit 1: (B)(N) KMI Kinder Morgan Incorporated – Risk Price Chart

(B)(N) KMI Kinder Morgan Incorporated

Kinder Morgan Incorporated owns interests in an energy transportation and storage company. The Company, through its subsidiaries, owns and operates pipelines that transport natural gas, gasoline, crude oil, carbon dioxide and other products.

(Please Click on the Chart to make it larger if required.)

From the Company: Kinder Morgan Incorporated owns and operates energy transportation and storage assets in the United States and Canada. The company operates in six segments: Natural Gas Pipelines, Products Pipelines—KMP, CO2—KMP, Terminals—KMP, Kinder Morgan Canada—KMP, and Other. The Natural Gas Pipelines segment consists of approximately 62,000 miles of natural gas transmission pipelines and gathering lines, as well as natural gas storage, treating, and processing facilities. The Products Pipelines—KMP segment consists of approximately 8,600 miles of refined petroleum products pipelines that deliver gasoline, diesel fuel, jet fuel, and natural gas liquids to various markets; and approximately 62 associated product terminals and petroleum pipeline transmix processing facilities. The CO2—KMP segment produces, markets, and transports carbon dioxide to oil fields through approximately 1,500 miles of pipelines; owns interests in and operates seven oil fields in Texas; and owns and operates a 450-mile crude oil pipeline system in Texas. The Terminals—KMP segment owns and operates approximately 113 liquids and bulk terminal facilities; and approximately 35 transloading and materials handling facilities that transload, store, and deliver various bulk, petroleum, petrochemical, and other liquid products. The Kinder Morgan Canada—KMP segment transports crude oil and refined petroleum products through approximately 2,500 miles of pipelines from Alberta to marketing terminals and refineries in British Columbia in Canada, Washington state, and the Rocky mountains and central regions of the United States; and 5 associated product terminal facilities. The Other segment includes various physical natural gas contracts with power plants. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan Incorporated in February 2011. Kinder Morgan Incorporated has 11,000 employees and is headquartered in Houston, Texas.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™“
Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.