Jim Collins was in London recently where it’s shaping up to be a long winter in the natural gas market.
“With the prospect of a cold winter in the forefront of people's minds here, and the gymnastics in the European gas market only partially resolved, the fact is that natgas prices are much higher than they have been historically,” Collins wrote recently on Real Money. A recent “close on the Dutch TTF benchmark for European natural gas pricing was €88.25. On October 22, 2020, it was €15.26.”
In such an inflationary environment, Collins says there simply isn’t enough natural gas in the world to meet demand, and thus prices for it are skyrocketing. “Correspondingly, values of companies that ship it … are still not reflecting the new reality.”
“Wes Edens' New Fortress Energy (NFE) - Get Free Report-- another frequent RM recommendation of mine, and one that has finally started to work -- recently purchased the LP part of Golar LNG (GLNG) - Get Free Report and Teekay LNG (TGP) - Get Free Report recently agreed to be acquired by private equity firm Stonepeak.” Collins added. “There aren't enough publicly traded LNG shippers out there...so, by God, don't sell the ones you already own!"
In addition, “obviously keep playing the suppliers like Cheniere (LNG) - Get Free Report and Tellurian (TELL) - Get Free Report, and the pipeline companies like Antero Midstream (AMGP) - Get Free Report and drillers like Antero Resources (AR) - Get Free Report,” he said. “Make sure you’re buying LNG shippers before industry players and private equity titans snap them all up.”