Kinder Morgan (NYSE: KMI) Executive Chairman Richard Kinder buys $14.99 million of stock

What happened

Richard D. Kinder, Executive Chairman of Kinder Morgan, Inc. (NYSE: KMI), bought 500,000 shares of the company's Class P common stock on Nov. 6. The Form 4 also lists Kinder as a director and a 10% owner of the company.

Kinder bought in multiple transactions at prices from $29.92 to $29.99 per share, for a total of $14.99 million.

Kinder held 246,712,353 shares directly after the purchase. The Form 4 also lists 61,479 shares held by a spouse and 11,812,747 shares held through a limited partnership. Kinder disclaims any beneficial or pecuniary interest in the spouse's shares and disclaims 99% of beneficial ownership of the partnership's shares.

Key numbers

Metric Latest Change Source
Shares bought 500,000 SEC Form 4
Weighted average price per share $29.99 SEC Form 4
Total purchase value $14.99 million SEC Form 4
Direct holding after the purchase 246,712,353 shares SEC Form 4
Purchase as share of prior direct holding 0.2% Calculated from SEC Form 4

Read more: Kinder Morgan (KMI) company research

Why it matters

The purchase is small against the existing stake. By OptimistFi's calculation, it equals 0.2% of the 246,212,353 shares Kinder held directly before the trade. That size means the trade changes Kinder's ownership very little, whatever signal an investor takes from it.

Even so, the Executive Chairman added to the position rather than reducing it, and the added shares landed in the directly held block, which makes up most of the reported position. The trades were tightly grouped, with the top price 7 cents above the lowest.

OptimistFi has argued that Kinder Morgan's value comes from fee-like, long-lived natural gas midstream assets that turn stable throughput into predictable cash flows, funding dividends and expansion. A purchase this small says nothing about throughput or cash flow, so the trade leaves that case unchanged.

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What's next

Kinder Morgan's next quarterly report is the next scheduled test of the case. Throughput, cash flow, dividends and expansion spending are what OptimistFi's view rests on, so that report matters more to the case than this purchase.

A later Form 4 would show whether Kinder keeps buying or changes the stake. Repeat purchases would give the insider signal more weight than a single trade of this size.

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Sources

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Originally published on OptimistFi, evidence-first equity research. More at optimistfi.com.