thexfilephoto Kinder Morgan (NYSE: NYSE: KMI ) is one of the largest publicly traded energy infrastructure players with a market cap of roughly $44 billion. At its core KMI is rather similar to other midstream companies (or MLPs) such as Energy Transfer LP (NYSE: ET ), Enterprise Products Partners (NYSE: EPD ) and Enbridge (NYSE: ENB ), where the bulk of cash flows are generated from relatively irreplicable and durable infrastructure assets. In KMI's case there is a more pronounced exposure towards natural gas segment, which accounts for 64% of the EBITDA generation leaving the remainder for mostly refined products and RNG.
However, the chart below shows the clear correlation between KMI and the rest of the MLP and midstream segment players. Ycharts What this chart also shows is that starting from early 2023, there has been a significant divergence in the total return performance between the KMI and the broader midstream segment. While on a YTD basis, KMI has delivered almost the exact level of total return performance as the relevant index, it has still not managed to compensate the negative return delta.
The question is whether KMI has the necessary characteristics and momentum to (a) deliver solid returns on a go forward basis, and (b) recoup the negative relative returns that have occurred since the early 2023 (thus registering an alpha compared to the benchmark). Let me know explain why I think that this is highly unlikely and why, in my opinion, investors should explore.
