What a $26 Million Cut in Kinetik Shares Signals Amid a 38% Stock Slide

On November 14, New York City-based SIR Capital Management disclosed a sale of 583,116 Kinetik Holdings shares, reducing its position by $25.98 million for the quarter.

What Happened

According to a U.S. Securities and Exchange Commission (SEC) filing dated November 14, SIR Capital Management sold 583,116 shares of Kinetik Holdings (NYSE:KNTK) during the third quarter. The transaction resulted in an estimated $25.98 million reduction in the fund’s Kinetik position, which now totals 227,722 shares valued at $9.73 million as of September 30.

What Else to Know

This sale brought the position down to 0.87% of 13F reportable assets, from 3.19% in the previous quarter.

Top holdings after the filing:

• NASDAQ: VNOM: $82.04 million (7.36% of AUM)
• NYSE: PR: $62.83 million (5.64% of AUM)
• NYSE: KMI: $51.55 million (4.62% of AUM)
• NYSE: DVN: $51.18 million (4.59% of AUM)
• NYSE: OKE: $47.79 million (4.29% of AUM)

As of Wednesday, KNTK shares were priced at $35.73, down a staggering 38% over the past year and well underperforming the S&P 500, which is up about 15% in the same period.

Company Overview

Company Snapshot

• Kinetik Holdings provides midstream services, including gathering, transportation, compression, processing, and treating of natural gas, natural gas liquids, crude oil, and water in the Texas Delaware Basin.
• The company also provides services to companies that produce natural gas, natural gas liquids, crude oil, and water in the Delaware Basin.
• It serves a customer base of upstream oil and gas producers, including both large-scale and regional energy companies operating in the region.

Kinetik Holdings Inc. is a midstream energy company with a significant presence in the Texas Delaware Basin, supporting the energy value chain through critical infrastructure and services. The company leverages a contract-driven business model to deliver stable cash flows and maintain a high dividend yield. Its strategic location and integrated asset base provide a competitive advantage in servicing leading oil and gas producers in one of the most prolific resource plays in the United States.

Foolish Take

For long-term investors, portfolio trims in midstream names tend to matter less as market calls and more as statements about balance-sheet confidence and cycle timing. Kinetik’s business still checks many of the boxes that typically attract patient capital, including long-term contracts and cash flows that are less volatile than upstream production. But recent results show why conviction is being tested.

In the third quarter, Kinetik generated $242.6 million in adjusted EBITDA and $158.5 million in distributable cash flow, while free cash flow came in at $50.9 million. Management revised full-year 2025 adjusted EBITDA guidance to a range of $965 million to $1.005 billion, citing slower-than-expected volume ramp-ups at Kings Landing and ongoing Permian takeaway constraints. Net debt stood at roughly $4.15 billion at quarter end, with leverage around 4.3 times adjusted EBITDA, a level that leaves little margin for error in a weaker commodity backdrop.

Against that backdrop, it’s notable that this position was reduced while larger allocations remained concentrated in other midstream and upstream names like Viper Energy, Permian Resources, and Kinder Morgan. The move doesn’t invalidate Kinetik’s long-term thesis, but it does underline a key takeaway: in capital-intensive midstream businesses, execution and balance-sheet discipline matter just as much as yield.

Glossary

13F assets under management (AUM): The total value of securities a fund manager reports to the SEC on Form 13F.
Alpha: A measure of an investment's performance relative to a benchmark, showing excess return or underperformance.
Dividend yield: Annual dividends per share divided by the share price, expressed as a percentage.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Midstream services: Activities involving the transportation, storage, and processing of oil, gas, and related products between production and end users.
Delaware Basin: A major oil and gas producing region located in West Texas and southeastern New Mexico.
Assets under management (AUM): The total market value of investments managed by a fund or investment firm.
Contract-driven business model: A business approach relying on long-term contracts to generate predictable revenue streams.
Integrated asset base: A collection of interconnected infrastructure and facilities supporting a company's operations across the value chain.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kinder Morgan. The Motley Fool recommends Oneok and Viper Energy. The Motley Fool has a disclosure policy.