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Cheniere Making Big Gambles With Other People’s Money

Popular wisdom has it that traders and modern investors alike are a short-sighted bunch. The focus is always on the next quarter’s earnings, the feeling is, which punishes companies with long term, strategic plans. Those that hold this view say that this obsession with short term profitability discourages investment and distorts the market. There may be some truth to that in certain sectors, manufacturing for example, but in energy the opposite is true. Markets are remarkably patient with companies engaged in the right business, even if immediate results aren’t forthcoming.

Take Cheniere Energy (LNG) for example. A quick glance at the chart since the beginning of 2012 tells you that the market just loves LNG.

The stock climbed steadily for two years, quadrupling in price from the beginning of 2013 until falling energy prices caught up with it in September of this year. The case for Cheniere is fairly clear. They are, as the ticker symbol would suggest, involved in the liquefied natural gas business, so, with the enormous boom in gas production in the US over the last 5 years, it is little wonder that the stock has done well. The only problem is that there is one thing missing from the picture. Cheniere is a public company and has been for a long time, but has never made any money.

The story is a fascinating one for sure; it could even be described as inspiring. The company started out with a plan to import natural gas to the U.S.…

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