Ken Lee

Cheniere Energy Partners: Building A Great Asset, But Valuation Well Ahead Of Its Time

Cheniere Energy Partners (NYSEMKT:CQP) is the MLP associated with Cheniere Energy, Inc. (NYSEMKT:LNG). In addition to housing the conglomerate's Sabine Pass Liquefied Natural Gas (LNG) import terminal, CQP is also home to Sabine Pass Liquefaction. Once this $10 billion, 18 million ton per year liquefaction facility is completed in 2017, it will be the first facility in the U.S. licensed to freely export LNG to any country of its choosing.

This is certainly a very advantageous position. However, we believe three factors cause CQP to be currently overvalued: (1) CQP's valuation relative to current operations is extremely high, (2) CQP's capital structure includes three dilutive equity securities, which will absorb much of the cash flow...

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