09-25-2013, 04:03 PM
The sector currently has too much capacity and shipping rates are under pressure. That is the bad news. The good news - new LNG projects are under construction and the volume of LNG available to be shipped will have a huge jump as these projects come on line in 2015 and 2016. Also of good news is the fact that TGP has no exposure to the spot market until 2015 or 2016, exactly the time that shipping demands will be increasing sharply. I own shares of TGP because of their nice yield of over 6%, because of their history of steady dividend increases, and because of their current contracts negotiated at favorable rates. I also have exposure to the sector via GLOG which is a small and growing player. I cashed out of GLNG but may buy shares of them as well, at some favorable entry in the future. IMO, current over supply and low spot rates will keep the share prices of LNG carriers under pressure for at least two years. For me that simply represents an opportunity to accumulate shares between now and 2015/2016 as LNG begins to flood the market and will need to be moved.
Alex