Outlier Hunter @OutlierHunter

Investor interested in stocks with asymmetry from very high growth, very high FCF, or very cheap options. No advice or recommendations. Joined February 2021

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Outlier Hunter @OutlierHunter

4 years ago

@QuickDCapital Per unit profits / margins can get and stay v high. That is where we are across the energy stack (coal, gas, oil), w mounting evidence every day that it will not change for decade or more

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Outlier Hunter @OutlierHunter

4 years ago

@QuickDCapital 2) The other thing ppl forget is that industry structure changes over long periods, especially due to supply side structural changes. Ppl always talk cigs, but also e.g. COBOL, refrigerants, etc. Once supply becomes LT constrained, even declining demand doesn’t matter.

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Outlier Hunter @OutlierHunter

4 years ago

@joshyoung Imagine thinking we are in 1974 (this time with many small cap oil and gas at low single digit multiples)…and owning digital assets that have no earnings. And it will be IMO be worse than the 70s as they did the right things (ration, drill) and we are doing the opposite

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Outlier Hunter @OutlierHunter

4 years ago

@GringoInvesting @NachoTrust From looking at other articles, seems like CP2 construction is set to begin in 23. Do you think there could be first gas in less than a year, or that the original article mistook construction for first gas? Seems too quick even for modular construction at existing facility.

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Outlier Hunter @OutlierHunter

4 years ago

@GringoInvesting @NachoTrust Wow, thanks @NachoTrust. That is crazy. After so many discussions of “the LNG gap through late 24,” it would be funny if $NFE + CP2 + debottlenecking + possible Plaq closed the arb in 23. During the “gap year.”

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Outlier Hunter @OutlierHunter

4 years ago

@GringoInvesting Yes, that’s what I mean. I just don’t think people get it. Aside from an export ban (possible), the price isn’t just rising, it’s going to $30+. Europe just showed elasticity when price goes from $3 to $30. 4% decline in a mild winter where they shut in industry.

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Outlier Hunter @OutlierHunter

4 years ago

@GringoInvesting Also, not sure if you are intentionally only doing new projects, but @JamieHeard5 had previously listed a fair bit of debottlenecking capacity too

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Outlier Hunter @OutlierHunter

4 years ago

@ArpatSood @GringoInvesting 8 units committed so far. But they will likely just build them until (and even probably after) the arb closes. They make an unlevered 15% monthly return on these. It’s insane.

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Outlier Hunter @OutlierHunter

4 years ago

@GringoInvesting Their recent investor presentations lay things out. Usually I would assume large projects will be delayed v “expected” completion date. But as CP and others have shown, when profits are this high and govt is helping not hurting, things can actually come early not late.

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Outlier Hunter @OutlierHunter

4 years ago

@GringoInvesting They also @ current prices make $180m a month on something like an $800m investment. W political situation re: Europe as it is, I think it’s v likely they get done. Always black swan risk, but there’s nothing I can see which would stop them.

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Outlier Hunter @OutlierHunter

4 years ago

@energyrealist Their debt is like $6k / flowing barrel. Comps like $2k to $10k. As I’ve said, if prices collapse v soon (next 3 to 6 months), they’ll be in trouble. Otherwise, IMO debt is irrelevant and will be gone soon.

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Outlier Hunter @OutlierHunter

4 years ago

@energyrealist Welcome to do whatever you want. In an energy shortage, you want leverage. And their debt / flowing barrel is similar to comps (lower in some cases)

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Outlier Hunter @OutlierHunter

4 years ago

1/ Here's a thread on Pieridae Energy ($PEA.TO, $PTOAF), a levered Canadian gas company. Tl;dr: it is three separate biz each with large upside IMO: A gassy E&P @ 20% of comps A sulfur biz (no cash flow until 12/25) @ 1x earnings A speculative LNG project with large upside

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Outlier Hunter @OutlierHunter

4 years ago

@AlfredMorrisCat @Go_Rozen 2/ Ironically things seen as “bearish” may be bullish in a supply side shortage. Financial markets collapse? Good luck financing a big drilling increase. Windfall taxes? I’m sure producers will really crank production then. You can stop exports, but that’d kill EU and Asia.

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Outlier Hunter @OutlierHunter

4 years ago

@AlfredMorrisCat @Go_Rozen 1/ Yes, that seems plausible to me. Wild thing here is there are many independent sufficient variables where supply can’t get there: shale exhaustion, labor constraints, rig / frac limits, E&P discipline, pipes, ESG, etc.

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Outlier Hunter @OutlierHunter

4 years ago

1/ A thread on the chance HH converges to TTF / JKM. I am not an expert, so any feedback is much appreciated. From my POV, I don’t see how this is not something like a 90% probability over the next couple yrs. Pls tell me what I'm missing.