Sold my KMI warrants

The warrants may still be slightly undervalued.  However, my instinct is to sell stocks/securities on rallies and to reinvest the proceeds into stocks that have dipped (e.g. ASPS).

I sold slightly below $4 (which is terrible trading on my part because I sold near the day low).  I still have a few call options which I plan on riding out to maturity.  This trade worked out well.

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3 thoughts on “Sold my KMI warrants

  1. Using your formula from your initial post regarding the KMI warrants, I.e. assuming current multiple and the announced 10 percent dividend growth … I get a 3x return. Do you agree with this calculation? The warrants seem more attractive now than previously under this calc. What do you think that prompted you to sell when the returns look so high?

    • Perhaps the multiple on KMI should drop a little. When it was the GP, KMI had a higher multiple than the LPs (KMP/KMR/EPB) because the GP/LP structure gave the GP favorable economics. Post-merger, the multiple should drop to somewhere between the GP and the LP. There are some tax savings that KMI will benefit from; there are some synergies from reverse financial engineering.

      The fundamentals have changed a little but I don’t understand it enough to say that it’s extremely bullish for Kinder Morgan. Given the price increase, I think that the risk/reward on the warrants is less attractive. Previously I had a ridiculously large position in the warrants so it makes sense for me to trim my position. I still have some call options.

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