There's an energy play that's been beating oil giants Chevron
) and Exxon (
) this year - and added $3 billion to Richard Kinder's now
$9.4-billion fortune, according to Forbes. It's pipelines.
Kinder Morgan has four companies with a combined 75,000 miles
of oil and gas pipelines, plus 180 terminals. The largest is
Kinder Morgan (
), which converted from an LLC to a corporation in February 2011
and in May bought El Paso Partners for $23 billion, creating the
country's largest natural gas pipeline network. That's followed
by the related companies of Kinder Morgan Management (
), Kinder Morgan Energy Partners (
), and El Paso Pipeline Partners (
KMI Market Cap
And here is how they've done.
Kinder Morgan describes itself as a giant toll road that
avoids commodity risk. It doesn't care how much crude oil or
natural gas costs, just that it moves through its pipelines. And
as Richard Kinder said on the company's second-quarter earnings
call in July, "we're all about generating cash and paying out
that cash to shareholders in distributions or dividends."
That's great if you're Richard Kinder, who runs the place and
has, with sponsor investors, 80% of voting power. But if you
don't already own Kinder, you'll find it's trading at a hefty -
very hefty - premium. Transporting oil's a good business, but not
a cheap one.
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From the editors of YCharts.
YCharts Pro Investor Service