Monday, May 12, 2008

Notable Calls Network (NCN): Cheniere Energy (AMEX:LNG)

Notable Calls Network (NCN) members were offered a superb trading opportunity this morning in shares of Cheniere Energy (AMEX:LNG). Early on I got a heads up from a NCN member saying RBC Capital was out with a major negative call on LNG.

Indeed, RBC was out lowering their rating on LNG to Underperform from Outperform w/ tgt cut to $1 from $20.

According to the firm new liquidity analysis shows that risk to investors far outweigh the gains, at present: ($64)MM cash position by 3/31/2010 from roughly break- even. Therefore, between the lower than expected quarter-end cash position and higher than expected completion cost of CTP, they believe that the liquidity position of Cheniere is no longer sufficient enough to reach early 2010 without substantial externalities helping to bridge the gap. Firm estimated a negative $64MM cash position by 3/31/2010.

They believe term loan holder has incentive to push Cheniere into Chapter 11.

So, RBC was pretty much saying the liquefied natural gas (LNG) project developer was kaput.

I took a quick look at the chart and saw the stock had already taken a big hit falling from $40 to $5 and change in 6 months. Yet, I felt that RBC's call was major enough to push it down even further so, around 8:00 AM ET I issued the following call to all NCN members that were online:

"..Heads up on Cheniere (NYSE:LNG) - RBC Capital downgrading the stock to Underperform & lowering tgt to $1 from $20 basically saying Chap11 is coming. I feel the stock will be trading in the low $4 or even below $4 today. - worth a look - fyi.."

The stock was trading around $5 and change in pre-mkt when I issued the call, giving early NCN members some nice fills. Most of the real action took place at around $4.70.

To my delight & I'm sure to the delight of NCN members the stock plunged right after open to around $3.7 giving us a nice $1+ gain, depending on one's entry. It's not every day one gets to make $1+ profits in $5 stocks, eh?

This is how Notable Calls Network (NCN) works - sharing the flow.

Want to be part of NCN?

It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.

Please do note that contacts via IM are limited to people with:

- 3+ years of trading experience

- Access to quality research/analyst commentary

- Ability to generate and share (intraday) trading calls

I will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 3 years of experience in the field.

1 comment:

cramermutebutton said...

this was a great call. it went down exactly like this NCN host just said. there are many more like it over the course of a week.