Natural gas transporter Crosstex Energy Inc.
But I honestly don't see what all the fuss is about. The company hardly seems unique. In fact, Crosstex Inc. and the limited partnership to which it plays general partner, Crosstex Energy LP
In both families of companies, the "LP" does the work, while the "Inc." gets the money. Crosstex Energy LP owns and operates the Crosstex pipelines; Crosstex Energy Inc.'s role is essentially to collect cash "distributions" from Crosstex Energy LP. Similarly with the Kinder Morgan clan. There, Kinder Morgan Energy Partners LP owns the bulk of the assets and makes distributions to Kinder Morgan, Inc.
So much for the similarities. How the companies differ is at least as dramatic -- and more important for investors. Now, with both Crosstex Energy Inc. and Kinder Morgan, Inc. functioning more or less as receptacles for money generated by their respective LPs, the best way to learn about the general partners' business prospects is to examine the fundamentals of these LPs. Take a look at this comparison between Kinder Morgan Energy Partners LP's stats vs. those of Crosstex Energy LP:
Kinder Morgan LP Crosstex Energy LPMarket cap: $8,750 million $385 millionSales: $6,330 million $453 millionEarnings: $674 million $2 millionEPS: $1.97 $0.04Net margin: 10.7% 0.4%ROE: 18.9% 1.3%
Numbers don't lie. Crosstex Energy LP has a lower price/sales ratio than does Kinder Morgan Energy Partners LP, but there is good reason for that: The latter is massively more profitable. Its net margin and return on investment both dwarf those of upstart Crosstex Energy LP.
As Warren Buffett famously said: "In the short term, the market is a popularity contest; in the long term, it is a weighing machine." Crosstex Energy Inc. may be the popular choice this week, but when investing for the future, I would place my bets on Kinder Morgan.