Betting on natural gas has been a tricky conundrum over the past several years. While consumption of the energy resource has generally been on the rise since the Great Recession, multiple factors including geopolitics can impose dramatic changes. If you’re a long-term holder of Tellurian (NASDAQ:TELL), you don’t need an explanation. Pulling up a broad-view chart of TELL stock gives you all the insights you need.
Nevertheless, circumstances are looking much better recently for the liquified natural gas (LNG) specialist. On a year-to-date basis, TELL stock is up nearly 200%. Under normal circumstances, that’s neither here nor there. But when you’re dealing with Tellurian, even the most inconsequential details could be a hidden argument to acquire more shares.
That’s right. For those who are unfamiliar, TELL stock has become a meme. And no one’s happier than Charif Souki, the longtime entrepreneur who, according to an article published in the Wall Street Journal, built the first U.S. natural-gas export terminal. Here’s what else the Journal‘s Collin Eaton had to say about his latest venture with Tellurian:
“Mr. Souki, the company’s 68-year-old executive chairman, records monologues about the global gas market and the company’s latest deals on his iPad, and rarely does second takes. He often discusses the investors’ online chatter with his investor- and public-relations officials to determine what they want to hear.
“‘We found so far that they’re extremely faithful. They do their homework. They understand exactly where we’re trying to go,’ Mr. Souki said of his new fans. ‘We find the retail market a lot more long-term oriented than the hedge-fund market.'”
For the most part, it appears that the love is reciprocal. Even for dilutive actions that Tellurian has made, Souki is quick to provide a reasonable narrative.
Enjoy TELL Stock, But Beware of the Blowback
As it so happens, I put TELL stock on my list of natural gas plays to consider because of soaring energy prices. In addition, one of my arguments for supporting Tellurian — at least in this phase of the market — is its first-class management team. Eaton pointed out that Souki not only knows the LNG business, he has a track record of turning around flailing businesses.
Clearly, those who believe in TELL stock are hoping for a repeat performance. Maybe he will, maybe he won’t. Personally, while it’s a great secondary storyline, the primary catalyst is the various reasons why natural gas plays are soaring.
As The 2022 Old Farmer’s Almanac warned, be prepared for a “season of shivers.” According to Janice Stillman, editor of The Old Farmer’s Almanac, “This coming winter could well be one of the longest and coldest that we’ve seen in years.” Further descriptions include phrases like “positively bone-chilling, below-average temperatures” running across most of the country.
So long as those projections are reasonably on target, TELL stock should benefit, albeit cynically. Then again, with folks betting big to pay off their mortgages and student loans, cynicism doesn’t matter, so long as you can cash out.
But that’s also part of the problem with TELL stock. Towards the end of his article, Eaton made a seemingly passing point that’s actually quite significant. “Several of Tellurian’s avid individual investors said in interviews they have gone all-in on the LNG developer, selling off all or nearly their entire positions in other companies.”
That last point is key. As I’ve always asked about the broader economic and market recovery following the pandemic, where’s the money coming from? In Tellurian’s case, it’s from sales of other meme stocks.
Be Ready to Get Out
As much as I think the natural gas narrative is incredibly powerful right now and that TELL stock has potential, we’ve got to be realistic. If the community at large decides to dump the underlying LNG firm, the selloff could be fast and furious.
Yeah, talk to me about diamond hands — but then talk to me about diamond hands when they’re grabbing onto something tangible or meaningful, a mortgage, student loans, a dream wedding, whatever.
Not to inject myself into the storyline but there’s a reason why I largely cashed out of cryptocurrencies and bought out my home. With cryptos, I had a digital promise. By actualizing the dream, I got a home free and clear. In this market, I could do a lot of good with that. In a down market, I could do good with that.
But you can’t say the same when you’re merely holding onto promises, digital or equity. Sure, if those promises are worth a few hundred backs, diamond hands away. But when cashing out nets you, say, $3,000 per month of cash flow for your working life (and possibly into retirement), it’s going to be difficult to convince others to go down with a sinking ship.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.