as part of our
Two weeks ago, I highlighted
two REITs with large insider buying
American Realty Capital Properties( ARCP)
Annaly Capital( NLY)
. Today, I'm going to continue this theme with a quick
discussion of MLP general partner
Kinder Morgan Inc(
The "Kinder Morgan companies" refer to
Kinder Morgan Energy Partner(
, one of the largest and most popular MLPs among income investors;
Kinder Morgan Management( KMR)
, a sister company that pays its dividend in stock;
El Paso Pipeline Partners(
, a more recent addition to the Kinder Morgan family; and Kinder
Morgan Inc., the general partner responsible for the operations of
the whole lot. Collectively, they are worth a hefty $90
billion in market cap.
Richard Kinder started the Kinder Morgan empire with pipeline
assets tossed away by Enron, and he's not your typical CEO.
He doesn't take a lavish salary, and he actually reimburses the
company for the cost of his health insurance premiums. His
income is based on the dividends he earns through his holdings of
Oh, and about that: Kinder just spent $18 million of his own
money buying shares on September 9.
And he wasn't the only insider buying. On the same day,
another officer bought nearly $100,000 in new shares. And in
the month of August, Fayez Sarofim, a director and one of the
company's biggest shareholders, bought about $15 million in new
Like most income-oriented investments, KMI got hit hard as the
market became fixated on Fed tapering. But I'll trust the
inside knowledge of the company's directors before I trust the
collective "wisdom" of an emotionally-charged market.
Action to take: Buy share of KMI and collect the 4.5%
dividend. Plan on holding for 12-18 months or for total
returns of 50%-100%. Use a 20% trailing stop as risk
This article first appeared on TraderPlanet.
Charles Lewis Sizemore, CFA, is the editor of
the Sizemore Investment Letter and the chief investment
officer of investments firm Sizemore Capital Management. As of
this writing, he was long ARCP, KMI and WMB. Click here to
learn about his top 5 global investing trends and get your copy
of "The Top 5 Million Dollar Trends of 2013."
This article first appeared on Sizemore Insights as Kinder
Morgan: Insiders Backing Up the Truck