Is Golar LNG (GLNG) a Smart Long-term Buy?

Horos Asset Management recently released its Q3 2020 Investor Letter, a copy of which you can download here. Horos Value Internacional has not been immune to this dichotomy of performance, posting a -4.7% return in the quarter, compared to 3.6% of benchmark index. On the other hand, Horos Value Iberia returned -0.8%, outperforming the -6.3% of its benchmark index. You should check out Horos Asset Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Horos Asset Management highlighted a few stocks and Golar LNG Ltd (NASDAQ:GLNG) is one of them. Golar LNG Ltd (NASDAQ:GLNG) is a liquefied natural gas shipping company. Year-to-date, Golar LNG Ltd (NASDAQ:GLNG) stock lost 32.9% and on December 30th it had a closing price of $9.54. Here is what Horos Asset Management said:

“At the end of August, Golar LNG’s subsidiary, Hygo Energy Transition (formerly Golar Power), announced its intention to go public through an IPO (sale of new shares issued with a capital raise). The aim of this move was to raise funds to finance its expansion in electricity generation and liquefied natural gas distribution. The valuation range released by Golar LNG for this subsidiary turned out to be significantly higher than our own valuation as well as the analyst estimates, which caused the stock to rally by 45% following the announcement.

However, on 23 September, an accusation against Eduardo Antonello, Hygo’s CEO, was made public. Specifically, he was accused of being involved in the incrimination of the oil drilling company Seadrill, where he worked until 2015, for bribes made in 2014. Following this announcement, Golar LNG’s share price plummeted by more than 30% in a single day and it was forced to suspend Hygo’s IPO, in addition to dismissing Antonello. Golar LNG claims that whatever happened to Antonello’s previous job position has no impact on Hygo. In our opinion, the tenders in Brazil conducted in recent years are especially transparent, with a computerized process, in which the submission of bids is done telematically. That said, an accusation of this nature is not good news for the company, whatever the result, since the reputational damage is high, takes some time to be repaired and may end up affecting the awarding of new contracts in this area. As of writing, Hygo’s valuation represents just over 25% of the value of the Golar LNG group.

Despite this, we still believe that Golar LNG has a high upside potential, not only because of the value of Hygo, but also because of other parts of the business, such as FLNGs (ships that liquefy natural gas at sea), where Golar LNG is one of the pioneers and most experienced and successful players in this market. Proof of this is that Golar LNG has restarted the manufacture of the FLNG Gimi—let’s recall that their client, BP, had asked for a 1-year delay in the manufacture, alluding to force majeure causes.”

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In June 2020, we published an article revealing Horos Asset Management’s bullish investment thesis on Golar LNG Ltd (NASDAQ:GLNG) stock in its Q1 2020 investor letter. This suggests that the investment firm has been bullish for a long time on Golar LNG Ltd (NASDAQ:GLNG).

In Q3 2020, the number of bullish hedge fund positions on Golar LNG Ltd (NASDAQ:GLNG) stock increased by about 29% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in GLNG’s growth potential. Our calculations showed that Golar LNG Ltd (NASDAQ:GLNG) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.