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Jeremy Johnson

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  • U.S. LNG Export Terminals: A Big Potential Investment Blunder [View article]
    Doesn't matter how expensive it is, the 50 mtpa from AUS will come to market regardless. I think the returns on those projects may be a bit subpar, but the gas will flow one way or another. The variable costs of production are tiny. This is a lot of supply for the LNG market to absorb and could impact the market for years with lower prices on the spot market.

    This is not an argument against holding Cheniere by the way. It is only to say the market some future projects expect may not be there.

    Also the transportation benefit is not negligible. The additional cost of shipping from the US as opposed to Australia is not much more than the all in wholesale gas price in the US currently. If spot Asia normalizes to spot Europe when Australia comes online, the transport fee will mean 25% extra cost when trying to sew up a new LNG project based in the US.
    Jan 14 12:05 AM | Likes Like |Link to Comment
  • U.S. LNG Export Terminals: A Big Potential Investment Blunder [View article]
    Production declines are due to cheap gas, the production increase was producers living off the capital they raised when prices were higher and also capital raised from dumb and strategic money.

    You would see a huge linear supply response as you moved from 4 to 5 to 6 dollar gas. The gas comes out of the ground so fast in these fracked wells, the projects are practically self financing.

    Everyone worries about the decline rates so much and in the long term it may be problem, but in the short term the high decline rates are a major positive. Your project payouts are measured in years instead of decades as with for example an oil sands project.

    But the easy money has been made on the drilling side (which is largely a land game). Now it is finding ways to arb $5-6 gas against more expensive energy, either gas on the international market (spot LNG is $19 -- might be able to make some money there?) or against crude by converting heavy vehicles to natgas, for example.

    Australia will start bringing on a massive amount of LNG in 2014-17 from many discrete projects (BG, Cheveron, Inpex, Santos, Origin). Up to 55 mtpa will come out of these projects while the global market was 240 mtpa in 2012. Australian production is much more of a threat to the viability of U.S. gas on international markets that the sustainability of shale fields. There is also another 50 mtpa of projects outside of Australia...
    Jan 7 12:57 AM | Likes Like |Link to Comment
  • Why Stan Druckenmiller Is Wrong On IBM [View article]
    Would Brando buy IBM or Amazon?
    Nov 24 06:30 PM | Likes Like |Link to Comment
  • Evaluating Store Overlap Between Walgreen And Rite Aid [View instapost]
    You're right, I missed about 150 Rite-Aid stores.
    Oct 24 10:38 PM | Likes Like |Link to Comment
  • The Battle For Mondelez: Coke Vs. Pepsi? [View article]
    Mondelez is worth far more than $35. Keep your hands off my global chocolate and biscuit business while trying to divest your burning soda platform Pepsi.
    Oct 2 12:52 AM | Likes Like |Link to Comment
  • Yen Bid Ahead Of Bank Of Japan [View article]
    I think they could refresh their REIT bucket soon (along with other measures).
    Aug 7 11:11 PM | Likes Like |Link to Comment
  • A Tale Of 2 Giant Telecoms With Giant Yields [View article]
    It is something like 5% or 10% withholding. You get a credit toward US taxes.
    Jul 16 09:30 PM | Likes Like |Link to Comment
  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    Changes in accounts receivable is not material for REITs.
    Jul 16 09:28 PM | Likes Like |Link to Comment
  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    A REIT does not have to report FFO which seems to be what you are suggesting and it has no bearing on its tax status. REITs are only required to distribute 90% of cash net income. FFO is not even a GAAP measure. The only substansive difference between FFO and EPS is the inclusion of depreciation in the former. Because buildings have long asset lives FFO has some value to look at.
    Jun 19 10:32 PM | Likes Like |Link to Comment
  • A Tale Of 2 Giant Telecoms With Giant Yields [View article]
    I don't think an investor has a reasonable claim to all of CHL's cash flow. For example, during the downturn the company was tapped on the shoulder to recapitalize a regional lender Shangai Pudong Development Bank (USD 6 bn), although it was done under the supposed auspices of a mobile payment partnership, I suspect this is political investment and not a financial one.

    Another poster brought up the obtuse structure of the SOE called CMCC which holds spectrum assets; in relation to the holding company. The SOE has a number of rather awkward agreements with the holding company that give it favorable economics.

    On the bright side, I think the dividend is extremely safe and it will grow at a nominal rate in the future, but the benefit to an investor is not like buying a 10x PE stock or in reality with all the cash CHL has (USD 65 bn equivalent), a 7x PE stock. CHL is not going to launch a $20 billion buyback like Verizon would in a similar situation.

    I own some CHL, but I don't expect much out of it.
    Jun 18 02:19 AM | Likes Like |Link to Comment
  • J.C. Penney (JCP) confirms Ron Johnson is "stepping down and leaving the company." Mike Ullman, who was J.C. Penney's CEO until Nov. 2011, is replacing Johnson as CEO, and has also been elected to the company's board. Investors don't seem crazy about the choice, JCP now just +0.5% AH. (previous) Update (5:33): Shares are now down 4.4% AH. [View news story]
    42k an hour is way too high. That's not even a sensible estimate.
    Apr 8 11:10 PM | 1 Like Like |Link to Comment
  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    Ventas and HCP have done much better than SNH the last 1, 2, 5 years.
    Apr 5 05:26 PM | 1 Like Like |Link to Comment
  • Making Sense Of Amazon's Market Value [View article]
    It doesn't matter how the investment is financed.

    The biggest issue by far with Amazon is determining how profitable the investments of the last 3 or so years will be over the coming few years in terms of boosting gross cash flow. You can look at how I defined gross cash flow and add it up based on TTM. Chart that across a few years and it will give you a good idea.

    By the way, there was recently an article in WSJ showing the results of a study that showed focusing on gross income predicted stock prices better than net income.

    I am not long Amazon because I think they are overinvesting. I don't think they will make good returns on capital on AWS (I don't even think it's a good business to be in). If they were just the best online retailer in the world, and that was all they aspired to be, I might be able to get comfortable with the valuation.
    Apr 5 01:12 PM | Likes Like |Link to Comment
  • The Fed Is Not Pushing Stock Prices Higher [View article]
    The interest rate markets are so heavily controlled by the authorities it is really hard to say what the price of credit would be without them. If indeed the private markets would set the rate at 2% on the 10yr without the Fed, then why do they feel compelled to purchase $1 trillion of securities per year?
    Apr 3 01:46 PM | 5 Likes Like |Link to Comment
  • "The market appears too sanguine in its view that a solution will inevitably be found," writes Morgan Stanley of Cyprus. Even if the government, Troika, and Kremlin (Kremlin?) somehow reach agreement, the faith between bank depositors and policymakers will have been breached. "There are significant problems behind the curtain." [View news story]
    Cyprus is a banking hub for Russian corporates and super high net worth's.
    Mar 18 03:08 PM | Likes Like |Link to Comment