Golar ~7%
Golar (GLNG, Financial) is one of the main operators in the liquefied natural gas value chain, owning production infrastructures and LNG carriers. Several developments in the first quarter reaffirmed that the investment assumption continues to develop well. In January the company announced the sale of Hygo, its natural gas-fired power generation infrastructure division, to New Fortress Energy (NFE), its main American competitor. At the same time, it was also announced that it was selling its stake in GMLP, owner of gas transport and regasification ships, also to NFE.
The price offered by NFE is reasonable, similar to our valuation, and this transaction will help simplify the company's structure and crystallise the underlying value of the business. Once the sale has been executed, Golar has received close to $950 million in cash and shares from NFE, while its market capitalisation is currently around $1bn. Looking at these numbers, we can conclude that the market considers the rest of the company's businesses to be worth practically zero. In our opinion, the business that Golar maintains, floating natural gas liquefaction and transport infrastructure businesses are worth far more than the share price reflects. This market inefficiency presents us with a very interesting opportunity, precisely at a time when the company's main owner and management team are more focused on executing the strategy of simplifying and crystallising the value of their assets.
From Francisco Garcia Parames (Trades, Portfolio)' Cobas Asset Management first-quarter 2021 shareholder letter.
