PPL update and gas news ?3

12:00 14-Jun-22

Freeport LNG has issued a statement saying that partial operations are expected to resume in 90 days, and full operation could take until year end.  To reiterate, I find it telling that it first focuses on all of the safety aspects of the event and the risk to the surrounding community.  I continue to think the case is made for the New Fortress offshore approach.

While we're at it I will note that the decline in PPL is somewhat interesting with the increased dividend ex-date on Friday.

A few quick notes on market irrationality to kick off the final week before June stock options expiration, which will be all the more interesting because markets are closed for Juneteenth a week from today.  I figured nobody needed to see me write about inflation again, but Friday's big index drop looks mostly like Wall St. dopes not having done their homework.  Now that most brokerages correctly show the yield on HIMX, I expect trading strength to continue.  More broadly, I've been solidly in the camp predicting that inflation would not be so easily tamed, and I continue to predict that the Fed sticks to a half point hike and tough talk on Wednesday.  Expect more market trepidation until that's confirmed, though.

Assuming I'm correct, I'll be more interested in the market leverage update, where I would view further decline as healthy.  Expect more dramatic change to start showing up in the electricity vs natural gas chart starting next month, though, and don't be fooled... Henry Hub prices are dropping because the Freeport fire below takes over 15% of export capacity offline for at least 3 weeks, but the event reinforces the case for offshore facilities and thus I reiterate that it is a positive for NFE, and to a lesser extent GLNG & XEBEF.  Oil is also in decline, but it's the Brent/WTI spread that I'll be watching and it remains fairly narrow at $1.50 largely due to declining western influence.  A big change in the spread could signal an end to the short-sighted trading that we've been seeing.  Until then could keep making moves that are every bit as stupid as Google's services and employees, but like I wrote in conjunction with VIRT pricing, that's Wall St. in the summertime.  The "sell in May and go away" chestnut only applies for those who lack the investment foresight and discipline to profit from the longer term macro factors and sound valuation principles.

On 6/9/22 12:03, Esekla wrote:

The PPL call has just concluded and my note below should have documented the June 20th ex-date for the new dividend as well as the credit rating upgrade from Moody's.  PPL does have the possibility of better than projected growth due to good practices in vegetation management and DERMS, which could lead to further M&A.  Moreover, Kentucky has $2b of upgrade potential in the transition away from coal, and 60% could be federally funded.  However, none of this looks near term, especially with a Republican Congress looming.  Overall, CWEN(A) looks better to me, for those who are mainly focused on income, though the current price point there is not especially attractive anymore either.  Thus, PPL section of the website will remain, but probably get less attention from me while the stock remains near $30.

On 6/9/22 09:36, Esekla wrote:

PPL has published its investor update press release, detailing a dividend raise to 22.5 cents quarterly with 7+/-1% growth targeted.  This is just as expected, and 3% yield would equate to a $30 current fair value.  The conference call is at 10am, and I will listen but may not write more.

Instead, VIRT, HIMX and natural gas remain my primary investment vehicles.  NFE might particularly get a boost due to a fire at the Freeport LNG terminal.  I also  note that the rebate rate on XEBEF is back to almost 120%.