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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (57978)	9/13/2016 7:26:10 PM
From: staring	Read Replies (1) \| Respond to of 78957

Thanks for your perspective on GMLP. I am currently with 15% gains in GMLP, but I think the stock has more potential. The demand for LNG is growing and I believe that the Energy market will be more volatile in the future. Therefore, I believe that the market will value flexibility. And I believe GMLP solutions provide such flexibility both to importers and upstream players. Nonetheless, with its current level of debt, the company may be vulnerable to worsening economic conditions. I think it would be more recommendable a capital structure more close to that of CMRE. Preferred stock is a nice financing alternative for highly cyclical companies, in my view. With regard to the other companies you mention, TOO and TGP, they are historically less profitable. Therefore, at the moment I feel safer at GMLP...

To: Paul Senior who wrote (57978)	9/24/2016 12:07:32 PM
From: Graham Osborn	Respond to of 78957

Paul, just my 2 cents at a high level: 1. A lot of these LNG storage/ distribution partnerships generally (if not closely) track the price of crude oil. I can't fully explain this, but it seems to persist for various reasons. So the stocks have rallied with oil, and you need to know something about where oil prices are headed to know how the stocks will do. Who knows? I don't. 2. The distribution bylaws are complicated for a reason: to discourage analysis. My suggestion is unless you have the time and energy to read the distribution bylaws for a candidate in full and conclude that a sufficient margin of safety is present for the cash flows of the selected seniority at the current price level, it's best to stay away. These are what Graham would call "exotic" securities which, like anything else, should be worth something, but the calculation becomes much more complex and requires a qualitatively different margin of safety. There's a reason some of us avoid debt - to properly evaluate a security you have to evaluate all the senior issues (and sometimes the juniors as well). My general assessment has been that investors can't and won't understand the bylaws until it is too late. Ironically, it would probably be safer to buy crude outright if you feel the need to make a bull bet on the energy markets.