Patient Investing

Patient Investing

Sometimes it takes years for a potentially attractive investment opportunity to materialize.  Investors should be aware of the probable time frame involved when making decisions.

For example, the development of fracking in the US energy industry resulted in a significant surplus of natural gas and a marked softening of prices.  This gave rise to an interesting opportunity to export liquefied natural gas (LNG), as discussed in our blog of July 5, 2012.

In order to export natural gas, as pipelines are not feasible, the industry typically concentrates natural gas through compression or liquefaction.  Developing a large-scale liquefaction infrastructure, including compression terminals, purpose-built ships and regasification facilities, takes time and a lot of money.

Because of the concentration of natural gas processing facilities on the gulf and east coasts, and the strength of Asian demand, shipment data through the Panama Canal can provide considerable insight as to the size of the opportunity.  In 2015, shipments of LNG through the canal were negligible.  The Panama Canal now handles approximately 45% of US natural gas exports and these shipments account for approximately 10% of the canal’s revenue.

Japan is currently the world’s biggest importer of LNG, with China and South Korea number two and three, respectively.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA