- Carl Icahn must still foresee plenty of profits to be made in the right energy investments, with his newly announced 8.18% stake in Cheniere Energy (NYSEMKT:LNG) coming after losing billions so far on his holdings in Chesapeake Energy (NYSE:CHK), CVR Energy (NYSE:CVI) and Transocean (NYSE:RIG).
- Cheniere soon will begin to throw off considerable cash flow as it prepares to export the first major amounts of U.S. natural gas by sea later this year from its $16B Sabine Pass terminal on Louisiana’s Gulf coast - but should the company start to return cash to shareholders through dividends, or should it continue to invest and grow?
- Cheniere recently revealed plans to further expand its Corpus Christi terminal and team up with another company on two mid-scale projects in Louisiana, even though it has not secured contracts for the full capacity of projects already announced.
- Heard On The Street's Liam Denning is among those who suggest Icahn may seek to push Cheniere to scale back its ambitions and focus on churning out cash for distribution from its existing contracts; Denning thinks the deal is not a bet on a gas price rally but that any recovery in oil would "turbocharge" Icahn's investment.
- "Cheniere has a very aggressive expansion program and is building out more export capacity than any company in North America," Raymond James analyst Pavel Molchanov says, adding that Icahn may say “You guys have built enough, and now it’s time to give to shareholders instead of building more and more and more."
- While Icahn's plans are unclear, traders bid up the stock anyway after the news, apparently with the expectation that Icahn’s involvement will help push the stock price higher - even though results so far from his energy holdings contradict that notion.