LNG

Publicly traded companies mentioned herein: Energy Transfer Partners LP (ETP), Cheniere Energy Inc (LNG), Cheniere Energy Partners LP (CQP), Chevron Corporation (CVX), Total SA (TOT)

Highlights

The presenter is long shares of Cheniere Energy (LNG) and sees the risk/reward as favorable in the low $30s. He has stress tested the valuation “on every measure” and thinks the story is reasonably clean at this point. LNG’s co-founder and long time CEO Charif Souki is finally out (as of December 2015) following a well publicized clash with activist investors, and with “everything stripped down” to the take or pay and re-gas contracts the parent company should be able to generate real annual FCF of $3.50/ share (Sabine Pass’ first cargo is expected by the end of Q1 2016) and pay a dividend in 2017. Shares are “tightly controlled” by a concentrated group of investors, but LNG is free of other risks plaguing Midstream Energy and MLP companies such as dividend cuts, funding and counterparty issues, and direct commodity exposure.