Rich is Losing His Patience

Rich Kinder Co-Founder, Chairman, and CEO

Rich Kinder
Co-Founder, Chairman, and CEO

Rich Kinder officially reached “irked” status on Friday with the recent stock performance of Kinder Morgan, Inc. (NYSE: $KMI). The gargantuan (or mucho for my Texas friends) GP hit a 52 week low of $30.93 the day before, as analysts again raise concerns over $KMI’s ability to grow distributions from such a large base ($100+ Billion enterprise value for the family of $KMI companies) in a rising interest rate environment.  Mr. Kinder is an investors CEO, often in the market buying the stock on dips.  In the month of February 2014 alone he made three separate purchases that totaled 400K shares at a cost of $12.7 million (not bad for a guy that takes in a salary of just $1 a year) for an average price of $31.70 per share.  His open market purchases are normally enough to encourage investors to get behind the stock and establish a floor on the price, but instead it’s been the case of “how low can she go.”


The company’s Friday press release was entitled “Kinder Morgan Expects to Meet or Exceed 2014 Financial Expectations.” The presser seems to be completely market / steam coming out of Rich’s ears driven as it provides no new information.  It simply reiterates the companies $14.8 billion backlog and budgeted dividend growth of 8% over the prior year ($1.72 per share), both of which were well telegraphed back at the $KMI analysts day on January 29.  The fact that $KMI emphasizes “exceed” is also not news, as Rich is known for fully deploying the UPOD (under promise and over deliver) theory when it comes to distribution growth.

The stock reacted positively to the Friday news, up more than 2% in a down market tape. The fact remains though that presser’s alone will not solve $KMI’s tired stock performance.  Over 50% of the company’s backlog is tied to a single Canadian pipeline project and it’s also concerning that just two years after $KMI absorbed El Paso the growth story is gone.  However, investors get paid a 5% yield to wait around and if history tells us anything its to never bet against Mr. Kinder.