Last December, I wrote that Kinder Morgan Inc (KMI) was a strong buy, citing the massive scale of insider buying as a bullish indicator. After all, if the people running the company are accumulating shares, chances are good that they know something the rest of us don’t.
Well, little did I know that the Kinder Morgan insiders had barely even begun buying.
Consider the recent aggressive insider buying by company founder Richard Kinder. On Feb. 24, Kinder bought nearly 200,000 shares of KMI, just four days after buying 100,000 shares. This was on top of the 828,000 shares he bought in December. In total, since June of last year, he has purchased more than 2 million shares worth nearly $70 million at today’s prices.
That’s right, $70 million dollars. And I should add, those shares were purchased on the open market and prevailing market prices; they weren’t executive stock options or some sort of dodgy inside deal.
Kinder Morgan is not a popular stock today. Barron’s recently dropped a bomb on the company with an article that questioned the accounting policies of sister company Kinder Morgan Energy Partners (KMP) and the relationship between KMI and KMP.
Is there any truth to the article? Maybe. I’m willing to accept that KMP’s accounting is overly aggressive. But it has used the same accounting standards since the 1990s, and its practices are well disclosed in its partnership agreement. There is no new news here and, frankly, I’m going to trust the word of a man who just backed up his opinion with $70 million of his own money over that of a financial journalist with no real skin in the game.
At current prices, KMI yields nearly 5%, and it is one of my favorite stock picks for the remainder of 2014 and beyond. Use the recent weakness to follow Richard Kinder’s lead.
Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long KMI. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays.