Even After Kinder Morgan Inc (KMI)’s Acquisition of its Associated Companies Jim Cramer is Unwilling to Bet Against MLP Structure

Kinder Morgan Inc (NYSE:KMI)‘s acquisition of its associated companies has raised the question on Wall Street as to whether the Master Limited Partnership (MLP) financial structure has run its course? The Kinder Morgan group was amongst the first few who adopted to the MLP structure and was also instrumental in popularizing it, back in the 90s. The MLP structure was soon adopted by a lot of oil and gas companies after Kinder Morgan Inc (NYSE:KMI) popularized it. Basically what the MLP does is allow companies like Kinder Morgan Inc (NYSE:KMI) to pass off all their profits to shareholders as dividends, without paying any corporate tax on it, though the investors need to pay taxes on the amount of profit that they receive. So is this the end of the MLP era?

Kinder Morgan Energy Partners LP (NYSE:KMP)

That and the play on Oil and Kinder Morgan Inc (NYSE:KMI) was the topic of discussion between Jim Cramer and the ‘Squawk on the Street’ team on CNBC.

“I thought it was interesting that he chose to use the Kinder Morgan Inc (NYSE:KMI) as the acquirer, not the Kinder Morgan Energy Partners LP (NYSE:KMP), which is the master limited partnership. This of course got rid of those incentives, the distribution rights that the people are so upset about,” Cramer said.

Cramer then went on to name other companies who are still using the MLP structure and are doing good as well, making his case that he is not going to bet against companies sustaining the MLP structure as of now. He also advised investors that if they are getting a dividend of $2 per share of Kinder Morgan Inc (NYSE:KMI), they should not sell the stock. Cramer also mentioned that even though it wouldn’t be great from tax perspectives, a lot of people have already made a lot of money through Kinder Morgan Inc (NYSE:KMI).

Disclosure: None

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!