1. Golar LNG Limited (NASDAQ:GLNG)
No of HFs: 31
Total Value of HF Holdings: $272 Million
The best oil tanker stock to buy now is Golar LNG Limited. The company operates 27 vessels and liquified natural gas (LNG) infrastructures. These include but are not limited to carriers, floating storage, and regasification units. In December 2020, the company announced the sale of FSRU LNG Croatia (formerly known as Golar Viking) to LNG Hrvatska. The sale will give the company a total of $47 million free cash between Q4 2020 and Q1 2021. As of March 6, the company’s shares trade at $10.72 and offer a dividend yield of 5.60%. Shares of GLNG soared 14% over the last 3 months. During the fourth quarter of 2020, the company reported revenue of $118 million.
There were 31 hedge funds in our database that held stakes in Golar LNG Limited, compared to 22 funds in the third quarter. Chrisitan Leone’s Luxor Capital Group is the biggest stakeholder of the stock, which had 4.7 million, worth $45 million at the end of December. Horos Asset Management mentioned GLNG in its Q3 2020 investor letter:
“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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