Here’s the lead-in that got Gumshoe readers banging on my door this week:
“MAJOR ANNOUNCEMENT IMMINENT! SHOCKING PROPOSAL COULD IGNITE 59,850% SURGE
“This serial entrepreneur guided his first company to a massive gain. And now, his latest venture has harnessed a patented technology that unlocks new $7 trillion energy sub-niche…”
So even though this is from Dr. Kent Moors, whose publisher has spun many a tale in teaser ads that turned into disappointment once we looked into the facts, we still want to know what the heck he’s talking about. And we’re not so enthused about throwing $1,950 into the kitty for a subscription to Energy Inner Circle… so let’s look at the clues and figure out what he’s talking about.
Here’s what Moors’ email said yesterday:
“At this moment, a tiny $8 startup has harnessed a mind-blowing technology that could deliver a 58-fold sales surge in the blink of an eye.
“Already, insiders have snapped up two out of every three available shares. GE and BlackRock have rushed in. And Citibank just accelerated their stake by a stunning 2,622%.
“This opportunity is so lucrative, one of the biggest technology funds in the world – a $45 billion titan – is eyeing an ownership stake in this tiny $8 startup.”
So what is it? There’s a lot of chatter about how getting in now is like getting in on the oil market 147 years ago, when the roads were still choked with horses and oil was just beginning to become the new fuel.
And how you can join in as a “serial entrepreneur” takes advantage:
“Right now, this serial entrepreneur’s new startup company is tiny…
In fact, they barely cobbled together $2 million in revenue last year! ….
“But they won’t stay small for long. In fact, they’ve harnessed a patented technology that could open the door for a 59,850% sales surge in the coming months.
“But time is of the essence…
“In fact, insiders have already snapped up two out of three available shares.
“And the serial entrepreneur and his team have laid down stunning personal stakes worth fortunes on this $2 million startup.
“The founder’s stake is worth $346 million….
“His right-hand man – at the company – just placed a personal bet worth $266 million.
“And it gets even better: the President of the company has also gone all in with a personal wager worth $139 million!”
And we get the inevitable (for a startup energy stock) Rockefeller comparison:
“This tiny $2 startup owns every significant aspect of the supply chain.
“Yep, just like Rockefeller…Are you getting our free Daily Update
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“They own the land.
“They own the drills.
“They own the wells.
“They own the liquefaction modules.
“They own the storage tanks.
“And they own the ships.”
Which is when the bells start ringing. Yes, Moors says that “time is of the essence” … and yes, he says that “a few ground-floor spots are available” … but this is also the same stock he teased very similarly, using a lot of the same language, almost exactly a year ago.
Yes, sez the Thinkolator, this is another pitch for the LNG company Tellurian (TELL). We covered that for the Irregulars back in January of 2018 here if you’d like to compare, and re-posted it for everyone in May when Moors got hot and bothered about it again. That wouldn’t have done you any favors, unless you wanted to short it — the stock was in the $10-11 range back then, and is now just bouncing off of the December lows and trying to get back up to $8 a share.
What’s causing the latest surge? Mostly it’s the chatter about Saudi Arabia investing in US LNG, with the publicly traded vehicles available mostly being Tellurian, Cheniere (LNG) or Sempra Energy (SRE) … and TELL and SRE are arguably the most compelling for big investors and are reportedly on the Saudi’s four-project short list, since they would really need capital for their huge planned LNG construction projects (Sempra is also a big regulated utility in California, but they’re planning several major LNG projects, with the Saudi’s possibly interested in their Port Arthur one… Tellurian is really a pure play on their planned Driftwood LNG project).
I would assume that the Saudi’s would most likely invest directly in the projects as joint venture partners, but I guess they could also buy equity stakes — don’t know. Either way, all LNG plant builders require massive amounts of capital and take a long time to get their trains up and running (Cheniere, the most advanced LNG exporter, went from about $2 billion in debt to $25+ billion as they ramped up construction over the past five years — and that’s after putting $16 billion of debt on their MLP, Cheniere Energy Partners (CQP)).
LNG Liquefaction and export companies are largely driven by two things: The cost of capital, since they require so much money to build and operate; and the differential between domestic natural gas prices and the import price they can get in Europe, Japan, China or South Korea (or other places, but those are usually the main importers).
There are lots of other operational concerns, of course, particularly for a company that’s still in the permitting phase like Tellurian and hasn’t actually built a facility yet or raised all the money they need for construction… but t