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   Technology StocksKMI- a fallen high dividend yielder - for how long?


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To: robert b furman who wrote (47)6/17/2018 6:26:35 PM
From: Jerome
   of 160
 
Hey Bob, I have read in the last few days that oil and gas pipelines are maxed out in capacity.

The discount on crude being transported by rail or truck is at $10.00 a barrel.

Is this bullish or bearish for pipeline companies?

Its bullish because the companies are generating maximum, revenue possible from existing pipelines.

Its bearish because revenue is capped at current levels.

This will change as new pipelines are built. but it puts a shadow on this sector for now.

What is your take on this outlook?

Are you considering buying some refinery stock?... Because refiners are running at almost full capacity. MRO comes to mind as a refiner to consider.

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To: Jerome who wrote (49)6/17/2018 10:21:25 PM
From: robert b furman
2 Recommendations   of 160
 
Its Bullish.

Pipeline companies are adding lubricity to the oil so it flows through the pipes faster. The additive is not expensive and it boosts flow up to 50% more.

rbnenergy.com

As new pipelines are built (requiring greater demand to justify the Capex) , existing pipelines that have easements in place and have an economic advantage to create greater pipeline capacity vs those who want to build greenfield pipelines.

Ya think they're making money? Count on it!!

Bob

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To: robert b furman who wrote (50)6/18/2018 8:53:57 AM
From: E_K_S
   of 160
 
Are most of their pipelines contracted for 'fixed fee" now or can they increase prices typically pegged to the price of oil? I like fixed fee contracts now as many go hammered when oil prices were at multi year lows and revenues were pegged to the price of oil.

Nice to know about the additives to increase operating capacity.

I was reviewing other pipeline/transport companies I own over last 5 year division revenues and all categories are higher but net income less due to Capx investment/improvements. The trend is positive now so cost controls very important.

EKS

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To: E_K_S who wrote (51)6/18/2018 9:02:09 AM
From: robert b furman
   of 160
 
Not totally sure of how a fixed fee is defined. I'm guessing that a minimum quantity is specified and that fixes the fee over a defined period of time.

I'm also guessing that if more oil or nat gas was transported the revenue would increase.

Good question! If the additive had a cost (and it does) I doubt they would do it without there being an associated revenue boost.

Energy business is embracing technology quite a lot of late - I like the sector.

Bob

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From: fred woodall6/28/2018 9:28:33 AM
   of 160
 
One analyst believes that the sale of the Trans Mountain Pipeline is a sign of more good things to come.

Matthew DiLallo

( TMFmd19)

Jun 27, 2018 at 2:31PM

Last month, Kinder Morgan ( NYSE:KMI) finally put an end to the uncertainty surrounding the future of the Trans Mountain Pipeline expansion project by selling the entire system to the government of Canada for $3.5 billion. Not only does that sale remove a huge overhang, but it will significantly bolster the company's balance sheet in the near term, thus lifting another weight that has been holding shares down to a bottom-of-the-barrel valuation versus its peer group.

That proverbial killing of two birds with one stone is just what analysts have wanted to see from the company. As a result, several have already upgraded the stock, with Wells Fargo now rating it an outperform and setting a $20 price target while Bernstein recently joined it with that rating while upping the ante with a $22 price target. However, in both cases, the analysts thought the Trans Mountain sale was only the beginning of the transformative moves that the pipeline giant will make in the coming months.

A sign of things to come?In the Bernstein upgrade, the analyst stated that Kinder Morgan's decision to sell the Trans Mountain Pipeline might "finally be the start of something good" for the company. Driving that view is that the sale of the controversial system "could give them a path to outperformance." That's because it shows a willingness to make the necessary changes to transform into a stronger company for the long term.

The Bernstein analyst believes the sale sets the stage for the company to make other moves, including selling its enhanced oil recovery (EOR) business, jettisoning other noncore assets, and bringing Kinder Morgan Canada Limited ( TSX:KML) back into the fold. Those moves would enable the company to reduce leverage from an elevated 5.1 times debt to EBITDA at the moment to a much more comfortable 4.5 times. Furthermore, it would eliminate the volatility of its oil production business, which has been hard hit by the oil market downturn. If the company made those moves, it could declare itself a safe, defensive, predictable, and financially strong midstream company, which is what it's supposed to be in the view of Bernstein.

This view matches that of Wells Fargo, which also thinks Kinder Morgan could have more catalysts on the horizon, including announcing a second gas pipeline in the Permian ( which it did this week) and the sale of its EOR business to reduce debt and further stabilize cash flow.

How likely are these moves?Both analysts believe that one of Kinder Morgan's next moves will be to sell its carbon dioxide business. This segment consists of two parts: carbon dioxide source fields as well as associated pipelines and oil field in Texas' Permian Basin. The supply and transportation business is the largest of its kind in North America and contributes about 4% of the company's earnings. Meanwhile, the oil production business is the 13th largest in Texas, accounting for 2% of the state's output and contributes about 7% of the company's earnings.

There have been rumblings in the past that Kinder Morgan has considered selling its oil business. In late 2016, Forbes reported that the company was looking for a buyer so that it could reduce debt and was reportedly seeking more than $10 billion for the business. CEO Steve Kean commented on those rumors during the company's fourth-quarter conference call in early 2017, saying that while it would consider a sale of any business as long as it bolstered shareholder value, it was in no rush to sell a business that generates lots of cash.

The company continues to get questions about the future of this business. In responding to the strategic fit of the oil business, it said in a recent investor presentation that while it generates the highest returns and significant free cash flow, "as a shareholder-driven firm, we continuously evaluate all options to enhance shareholder value." In other words, for the right price, it could sell, though that doesn't seem to be a priority.

Another move many analysts would like to see the company make is buying back Kinder Morgan Canada Limited, which it just took public last year to finance the Trans Mountain Expansion. While that would simplify its corporate structure, CEO Steve Kean stated on last quarter's conference call that it's interested in acquiring midstream assets in Canada. It would have more flexibility to make deals if it used Kinder Morgan Canada's stock as an acquisition currency, which is why it might keep that entity public.



The future is bright even without further actionAnalysts following Kinder Morgan are growing increasingly optimistic about the company's future following the sale of the Trans Mountain pipeline because they believe it's the first of several big moves. While Kinder Morgan could make additional changes, it doesn't have to since its current strategy built on organic growth and returning capital to investors has the potential to grow shareholder value in the coming years.

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To: robert b furman who wrote (52)6/29/2018 3:47:12 PM
From: E_K_S
   of 160
 
Some tax loss harvesting. Sold 40% of KMI at $17.75/share w/ the expectations to Buy this stock back in 31 days. Will miss the $0.20/share dividend but will buy back position reducing my cost basis.

These shares had a high cost basis about $41.00/share when the MLP converted to a C corp. Nice that I can harvest lots of long term gains to offset this loss so timing is good w/ market at/near all time highs.

My other pipeline companies doing good, ENB, PBA as well as the MLPs I hold. KMI by far had the highest cost basis with this sale at $30/share. When I finish my re-buy s/d get avg cost down to around $24/share. Then if I sell the other high priced shares (I need to wait 30 days on the sale and 30 days on the buy) in Aug/Sept, I can Buy those back in the Nov/Dec period.

Therefore, to avoid the 'wash' rule need to do those sales now if I do 50% of the high cost shares (ie 2 separate sales) in two batches.

Maybe we will see KMI work it's way back to $30.00/share where it traded in 2014.

EKS

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To: E_K_S who wrote (54)6/29/2018 4:29:25 PM
From: robert b furman
   of 160
 
Hi E_K_S,

I have some 200 at 35.00 and the rest were assigned from some $25.00 puts back when the dividend cut was made.

I doubled down to lower my cost average back when they announced the expected dividend increases through 2020.

I have also sold some 18 puts that if KMI stays below 18 - I'll get quite a few shares for a net of 15.83 .

Last month I had 3100 of KMI put premium expire and this next January I have some 15.00 puts that I think will expire to zero also - that 5,000 grand doesn't lower the cost basis, but it helps me metally stay positive on KMI.

if they keep to the expected dividend increses I'm ballparking I have an average cost of 21 ish.

It will have taken several years to evolce but I'll have a 5.7 % yield on my cost - not counting the put premium I collected.

Long term KMI is a great stock and zi expect their dividend growth the be strong as well.

I liked the sale of the pipeline to Canada, as proceeds were said to reduce debt.

Many still HAVE HARD FEELINGS ABOUT THE DIVIDEND REDUCTION.

They were doing the right things by becoming a C corp and I do not know who knew the Saudi's would pull such a massive flooding of oil in the market place - It caught most for a loop and KMI has done a good job of recovering imo.

It will be a long term buy and hold for me.

Have a great weekend - its hot here in Wisconsin!

Bob

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To: E_K_S who wrote (54)8/6/2018 11:30:20 PM
From: E_K_S
   of 160
 
After 31 days was able to buy back my shares sold at $17.75/share for $17.62/share last Friday. AVG cost lowered but have another chunk to do in 31 days.

To avoid a 'Wash', you have to not Buy/Sell 31 days Before and After you transaction/ It takes 62 days to complete the Buy/Sell . .wash & repeat. To harvest losses, I do 1/2 of the shares in the 62 day cycle then the other 1/2 in another 62 day cycle.

I had a lot of $30/share basis stock from the conversion of the MLP to the C corp. I should get my average cost down to around $20/share after the two 62 day cycle are complete (ie 124 days).

I thin KMI is a 2019 & 2020 story stock especially as economy continues to grow and domestic Oil/NG usage increase and maybe get some growing exports too.

EKS

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To: E_K_S who wrote (56)10/26/2018 10:28:04 AM
From: E_K_S
1 Recommendation   of 160
 
Did another Sell (9/5/2018) of KMI @ $17.62/share and bought back 50% of those this AM @ $16.25/share. Getting my avg cost down after their conversion from MLP to C corp.

Avg cost of total position after this Buy is $17.02/share. Have the final Buy GTC set at $15.34/share which may/could hit after xdiv date of 10/30.

On my last Buy, I get the $0.20/share div and stock yields 5%. Would like to get the other shares at/below $16.00/share after the xdate.

Good Investing

FWIW looking at value Buys w/ companies that pay a 5% div and can cover their dividend w/ modest revenue growth. Will buy 4% payers but must have better growth prospects (CY is on my candidate Buy) and in a sector that has already corrected back to their SMA(200) weekly. $SOX and XLE have seen this correction back to their SMA(200) weekly so time to be shopping for values in these sectors.

EKS

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To: E_K_S who wrote (57)10/26/2018 8:47:07 PM
From: robert b furman
   of 160
 
Right kind of thinking Eric,

Bob

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