Republished from June 28, 2015.
Members:
Thanks for the great questions.
The primary reason for the change in our opinion of Kinder Morgan (KMI) rested in a comprehensive evaluation of the combination of four separate entities that were combined into one corporation coupled with the release of audited and consolidated financial statements via the 10-k release in late February in addition to the incremental information in Kinder Morgan’s first-quarter results, released after that.
It took several months of thesis re-development.
The company was removed at a profit in the Dividend Growth Newsletter portfolio and was a substantial relative outperformer compared with the rest of the oil universe during its holding period. Readers were positioned extremely well prior to the collapse in crude oil prices, and in light of our updated views on Kinder Morgan, the risk had no longer equaled the reward.
In short, it took time to get our head around this call, and once we felt comfortable that removing it was the right thing to do, we didn’t hesitate. A firm’s technical and momentum backdrop is also a key consideration, and this had been growing increasingly more negative on Kinder Morgan at the time.
Our process considers a variety of factors, and our due-diligence before making any move is extensive. Hope this helps clarify.
We appreciate each and everyone of your questions.
Kind regards,
Brian Nelson, CFA
President, Equity Research & ETF Analysis