| | | Do you have any other "deep value" trades?
No, I don't have ideas very often. I've followed NGL for 5-6 years, and paid attention to them since they collapsed in the pandemic bust followed by the oil price collapse of Q1 2020.
The unit value hit bottom in Q4 2022 ($1.00), and the fundamentals seems to have improved in fiscal 2023 (end March 2023).
Understanding this one will require a deep dive into secured and unsecured debt, preferred stock, and what makes bankers keep debt laden massive revenue streams alive. I can't claim any expertise in any of their energy related business lines, so having an opinion on whether or not the good news (they recently increased their fiscal 2023 EBITDA forecast from $600m to $630m) will keep coming is beyond my grade level.
What I can say is if the market determines that NGL is not going bust, and is instead an ongoing concern with some reasonable growth prospects (their water business), then it's probably easy to value it at $10 to $15.
That question (whether the banks will refinance and extend NGL's debt) is the big question for the next two years.
Today it's $2.68, so there is the high risk high reward aspect that appeals to me. |
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