Copio los comentarios "negativos" que le hizo un forero que lleva tiempo advirtiendo de la situación de la compañía a Gabriel Castro en la entrevista que publicó en SA, por si alguien no los leyó, ya que el artículo ha pasado a estar restringido. Creo que viene a coincidir con lo que comentas. Dilución a la vista y que tenían que haber esperado para comprar:
SecretUser
Hi Gabriel - I’m back. Look it’s this simple - I said short GLNG while all you guys said it’s the steal of
the decade in the low teens. At issue was liquidity runway and ability to both: (1) effectuate a spin-off
of the LNG fleet and (2) fund GIMI without incurring dilution.
In Q4 mgmt clearly stated that they didn’t take up offers to sell a portion of GIMI because they didn’t
like the price. Welllll... now comes the pain.
Here is the clear liquidity problem GLNG faces today:
(1) $100mm margin loan outstanding is collateralized by 20mm shares in GMLP worth, ohhh $60mm
when Q1 ends. Thus, the margin loan will reduce probably down to around $40mm; ($60mm hit to
unrestricted cash).
(2) GLNG will either now face dilution in spinning off its LNG fleet, or dilution in selling the portion of
GIMI they should have sold back in Dec... because the bid now will be even lower.
(3) Either way dilution is coming... and this doesn’t even account for the $150mm TL that needs to be
refinanced. Sorry; just because you have access to mgmt which tells you it’s a done deal, doesn’t
mean you actually have credible information. This management company did not take the prudent
choice - they played with fire. Dilution coming, either I. The form of selling an interest in GIMI super
cheap, raising convertible preferred equity from say Blackstone or someone, or essentially giving away
the LNG fleet as outside investors capitalize it with sufficient cash runway for the next 6-12months.
I’ll give you that GLNG held up as the world initially traded off... but re-evaluate your thesis here. I’ve
been saying stay away from GLNG since August and low teens, and look to short in the mid-teens.
You’ve been buying the whole way down, or at least telling people who have a similar high cost basis
as yourself to stay in as no dilution is coming. Wait and see, once it comes - that +$30/sh 2022 story
you’ve bought into is off the table.
---
I think we pretty agree on everything about strong
fundamentals within GLNG and how it’s very fixed return nature should allow for a better re-rating
(especially as rates are now 0).
The only disagreement continues to be one of understanding capital markets, and how liquidity, or the
potential for illiquidity gets re-priced at a companies worst time.
(1) LNG fleet spin, agreed, at current valuations, GLNG is better holding onto the assets instead of
diluting as part of a spin where they take in $100mm of outside money, which could easily command
+50% control in this environment. Too dilutive!
(2) This leaves upping the leverage on their $150mm TL as it comes due later this year; or possibly
extending the maturity and paying an extra 50bps. While this would mark the least amount of dilution...
I just don’t think GLNG can make it this long; as I fully expect unrestricted cash by June end to be well
below $150mm (absent asset sales)
(3) Which takes me back to GIMI. Personally, I thought HILLI would’ve been the one to sell as it’s
operational, profitable, and scaleable if T3 comes. Anyways, I digress... buttt between natural buyers
of GIMI (read: Brookfield/Blackstone); why on earth would they ever give a higher bid amidst the
current market than whatever they offered back in Dec? Not happening... risk premium has gone up,
liquidity need has gone up, thus the price GLNG will be willing has gone down - and these guys know
it.
Interesting times ahead, but the main reason we disagree is - with all your “training” as a CFA... you’re
insistence to keep dollar cost averaging down, or holding from the mid-teens... it’s illogical. The risk of
dilution was a risk back in August; and it’s even more likely with GMLP stupidly priced here. Just wait;
wait for either the TL to be upsized, or the 20-30% sale in GIMI to materialize. Sure the stock will be up
10-20% on that day - BUTTT you would have avoided exactly what happened - being stuck holding a
name now in the mid/upper single digits, unable to buy other flow names which are wayyy off until this
catalyst emerges.
I value that optionality; in fact all of the best investors I’ve come across always seek out downside
protection with upside optionality. The downside in GLNG is only off the table once they raise money
by selling GIMI - this was Troim’s sin; he didn’t take a good offer in hand, hoping for better. I saw the
tea leaves that he was likely to do so given mgmt’s crazy decision to extend the Arctic or Viking
instead of selling it (forgetting which), but that was the clue that mgmt would risk it all to preserve
$40/sh.
We’ll see; but this stock is not touching $40/sh by 2022, much less $30. I’ll throw a couple $$ at it
following announcement, just not in advance. If that means I’m in at $8 or $9 instead of $7, so be it...
but $7 is here now, and those who held learned a very valuable lesson... I’m just surprised you can’t
even acknowledge that. I’ll gladly miss the first bit of upside in favor of safety knowing the floor is in.
The last month just showed why that mindset is soooo critical today. Besides, you can still literally buy
GMLPP (preferred’s at $0.50).
