Kinder Morgan Inc - Class P

Kinder Morgan is mentioned as one of the four midstream holdings in the portfolio, alongside Enbridge, Williams Cos, and TC Energy. The letter states that these companies represent four of North America’s largest pipeline companies and notes that with the expected growth of hydrocarbon demand in the US and Canada over the next five years, especially for natural gas, each company is well placed to execute its pipeline and energy infrastructure expansion plans.

Kinder Morgan reported earnings above consensus, indicating strong operational performance. The anticipation of further data center announcements suggests potential for future growth. This positive earnings performance, coupled with the expected increase in pipeline capacity in the sector, positions Kinder Morgan favorably for continued success in the midstream energy market.

We added to positions in TC Energy (TRP) and Kinder Morgan (KMI), which we expect to benefit from rising natural gas demand driven by data centers and natural gas exports. The infrastructure sector has become a well-established allocation within investor portfolios due to its ability to provide strong risk-adjusted returns, inflation protection, and limited overlap with traditional equity indices. Kinder Morgan's positioning in this sector aligns with our expectations for growth in natural gas demand.

Kinder Morgan had some favorable events that we believe helped drive its stock price higher—a consensus developed that AI data centers will require a significant increase in US natural gas consumption; the new administration reversed the previous ban on LNG development; and the company materially increased its backlog of financially attractive development projects. In addition to these positive external developments, solid operating performance and continued exemplary corporate management contributed to strong stock performance.

Kinder Morgan performed strongly in the second half of the year as the interest rate easing cycle commenced. The midstream sector was an outperformer over the year, with every company in this subsector delivering positive shareholder returns. The focus on infrastructure build-out helped to drive share prices higher, and pipeline companies exposed to gas generally outperformed, indicating a favorable environment for Kinder Morgan.