Yesterday, shares plunged 36%, only to rebound more than 35% this morning. There was immediate short covering then apparently, the shorts sold the shares again driving out the hot money day flippers.
Our position on Cheniere Energy has not changed.
Hold the shares that you own.
Since last year, the company remains on track to gain the required permits from the D.O.E and other state and federal agencies that will allow it to become the first company to export liquefied natural gas in the US. This will create more construction and energy related jobs and a solution to the over abundance of NG supply at $4.00 per unit. The arb play is to buy it here in the US and sell the cooled LNG in offshore at $9.00 per unit. A brilliant play!
Cheniere Is Not in Default on and Debt Payments as guaranteed by the CEO and E&Y accounting firm.
The only issue filed in the 8K was a disturbing letter filed by a bondholder in Cheniere Energy Partners, a firm related to Cheniere Energy called Centerbridge Partners who are obviously entangled with the 10,000,000 share shorts. The bondholder claims Sabine Pass is in default of a debt payment because it strayed from general accounting rules in the way it recognized revenue. Totally not true per Cheniere's CEO, Charif Souki.
What happened then? The Centerbridge bondholder letter scared investors out the market on Wednesday and sent the shares plunging until clarity could take hold, unexpected from the company's intentions for disclosure.
We spoke to the company Wednesday like others did and executives there say that the lawsuit is baseless. Centerbridge isn't even a shareholder and they don"t even know what bonds are in question? The company has filed a lawsuit, claiming that the bondholder has disrupted Cheniere’s business and engaged in defamation and business disparagement. So true and malicious! Additionally, Cheniere said that its auditors found "no fault" with the company’s revenue-recognition policies in the most recent quarterly report that went out a few weeks ago.
Citigroup agrees with our firm belief that Cheniere Energy will soon very likely receive the necessary permits from the Department of Energy to export U.S. produced LNG to Asia. Why would they block this agenda to create more jobs and earn US more revenue dollars? This morning, Citigroup reiterated its “Buy” rating on the stock and calmed investors. Buying ensued, then shorts re-entered.
Current action to take: HOLD Cheniere Energy (LNG) to the $11.00 level unless otherwise advised. Click
If the stock stays in the $7.00 range buy more shares. Remember that before the letter of disturbance by Centerbridge, Cheniere had traded at the $10.50 level, well ahead of our initial $5.00 buy price late last year. We feel that the stock, ultimately, is headed into the $15 - $20.00 level for those longer term players.
A similar play occurred three years ago with InterOil and a Refinery in Papua New Guinea. Check it out. LNG went from $10.00 to $75 with the help of George Soros HF manager.
