Insider Eyes Kinder Morgan

10/15/2018 5:00 am EST


Stephen Biggar

Director, Product Strategy, Argus Research Corporation

Insiders are starting to go radio silent in advance of the release of third-quarter operating results. As expected, that means that the volume of insider transactions has started to slow, notes Stephen Biggar, analyst and senior editor Argus Research.

On September 27, Richard D. Kinder, co-founder and executive chairman of Kinder Morgan Inc. (KMI), purchased 500,000 shares of KMI stock for an average price of $17.553 per share, or roughly $8.8 million in total.

Mr. Kinder has a brief history of purchasing KMI stock on the open market, beginning with five 100,000 share purchases between March and November 2015 (at prices ranging $24.69-$39.50) and followed up by a purchase of 500,000 shares in late-May 2017 (at $18.579 per share). He has not purchased any additional shares since the May 2017 order.

While the timing of his earlier purchases could have been better given the stock’s performance over the past few years, several bits of public information may help explain the latest round of buying.

Oil prices are on the rise; the company has momentum after beating the earnings consensus for the past three quarters; the stock recently achieved a golden cross as its 50-day moving average climbed above the 200-day average; and the stock price fell about 4% in the prior week, but managed to maintain support near his purchase price.

Alternatively, Mr. Kinder may have recognized that the stock is relatively inexpensive compared to peers or he may have confidence in management’s ability to grow the company. As of this writing, he holds roughly 10.7% of the company.

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