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Should Value Investors Buy Golar LNG (GLNG) Stock?

Horos Asset Management recently released its Q1 2020 Investor Letter, a copy of which you can download here. Horos Value Iberia fell by -35.1% compared to -27.6% of its benchmark index. On the other hand, Horos Value Internacional was down by -30.2% compared to -19.6% 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 the stock market crash.

In the said letter, Horos Asset Management highlighted a few stocks and Golar LNG Ltd (NASDAQ:GLNG) is one of them. Golar LNG is a liquefied natural gas shipping company. Year-to-date, Golar LNG Ltd (NASDAQ:GLNG) stock lost 48.7% and on June 24th it had a closing price of $7.27. Here is what Horos Asset Management said:

“We also invested for the first time in Golar LNG, a liquefied natural gas (LNG) infrastructure and shipping company. We believe that its share price was excessively punished in recent months, even taking into account a negative liquidity scenario for the company. This is a complex company to analyse, to which we have dedicated several months of work. To sum up, Golar LNG has exposure, through its different business areas, to practically the entire LNG value chain. Specifically, the company owns FLNG (Floating Liquefied Natural Gas) facilities designed to convert gas from offshore fields into LNG. Additionally, it owns several LNG carriers, as well as FSRUs (Floating Storage and Regasification Units). The company also holds a 50% stake in Golar Power, a joint venture formed with Stonepeak Infrastructure Partners in 2016, which owns —among other assets— 50% of Sergipe (located in Brazil, the largest gas-fired power plant in South America) and Nanook (a FSRU that will primarily serve Sergipe), as well as 50% of Bacarena, another Brazilian gas-fired power plant that will not be available until after 2025. Finally, Golar LNG holds a 32% stake in Golar LNG Partners.

It is therefore a company that gives us exposure to the positive long-term dynamics of natural gas through its different lines of business. However, various short-term financial risks —which we think are manageable— are punishing the Golar LNG stock price, whose current market cap do not give any value to Gimi (contract for the exploitation of an FLNG that is 70% owned by Golar LNG and which, signed with BP for 20 years, will come into operation in 2023) or the potential extensions of Hilli (FLNG operating with Perenco, which could expand its production capacity), among others. In addition, Golar LNG is directed by Tor Olav, a Norwegian businessman with whom we met in November last year. He has managed to generate extraordinary returns over the last 20 years in the very tough shipping industry. Tor Olav owns 5% of the company, which guarantees an alignment of interests with the rest of the shareholders.”

In Q4 2019, the number of bullish hedge fund positions on Golar LNG Ltd (NASDAQ:GLNG) stock decreased by about 27% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Golar LNG’s upside 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 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 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

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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

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