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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (52751)11/9/2013 10:55:03 AM
From: E_K_S  Read Replies (1) of 78915
 
Re: KMI-WT

I got these warrant w/ the El Paso merger (2/2012) and since then added to KMI but not to my warrants. Here are the specific terms.

Each warrant allows an investor to purchase a KMI class P share at $40 and expire May 25, 2017.

(Note: My El Paso stock was exchanged for the following: 0.4231 of a share of KMI Class P shares, $14.53 in cash and 0.640 of a warrant to purchase one share of KMI Class P shares)



These warrants were selling above $5.00/share earlier in the year. At the time of the merger I believe they were selling for $1.60/warrant.

I assume your investment is short term and you are not looking to ever convert these into KMI shares at $40.00/share. For me, since I have only a few hundred warrants, I did an analysis where I looked at selling the warrants and buying shares in KMI and/or just holding the warrants and/or adding more warrants to my current position.

Owning the KMI shares you get the distributions. Selling the warrants for me, incurs a tax event but now is a long term capital gain (Fed 12, 2012 the warrants were issued) . Owning the warrants is a leverage play on owning the stock (about 6:1).

I like your premise especially with KMI buying back the warrants. My long term objective is to own more KMI stock but I had buy orders in at lower prices.

What's your expectation for gains > than 20% holding the warrants or are you holding a blended position (stock & warrants).

I think I will look at a blended position so if/when I exercise the warrants, it meets my core holding expectations for KMI.

EKS
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