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Stock Strategist

Kinder Quibbles No Cause for Concern

Research firm's claims don't change our opinion of this wide-moat group of companies.

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Kinder Morgan fared poorly Wednesday following a press release from research firm Hedgeye, which said Kinder "may be a mere house of cards, completely misunderstood and mispriced." Hedgeye won't release its research until next week, but cited a handful of topics it will discuss. For the most part, we view these topics as old news and stress that we're talking about a group of companies that operate the nation's largest pipeline network, generating north of $5 billion in EBITDA from tangible physical assets. While we always welcome critical analysis and questions to the give-and-take debate over master limited partnership valuation, we're skeptical of the claims Hedgeye is making. For more detail, see our Sept. 5 note, "Wide-Moat Kinder Morgan Under Attack; Looks Like a Buying Opportunity to Us."

Three Kinders and a Limited Partner
 Kinder Morgan Energy Partners (KMP) is one of the largest master limited partnerships, engaged in the transportation and storage of energy commodities. It operates more than 37,000 miles of pipelines for oil and natural gas transport. It also owns 180 terminals that can handle and store liquids, gases, and dry-bulk materials, such as coal. As a partnership, the company pays no corporate income tax, but its tax burden flows through to individual unitholders.

Jason Stevens does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.