Rockpoint Gas Storage: Cyclical Wolf in YieldCo Clothing
Predictable EBITDA is the sales pitch for the recently public RGSI. 15-years of pre-IPO financial history says otherwise, and the PE sponsor, Brookfield, is cashing-out as fast as possible.
The disclaimer below is an important part of this post.
Is it different this time?
Although RGSI is sold to investors as a steady EBITDA generating YieldCo, the assets have a long history of volatility. RGSI is the public reboot of Niska Gas Storage, which went public after a few good years only to subsequently collapse. Brookfield purchased Niska, where it languished for almost a decade until a few good years presented an exit opportunity.
Rebrand and resell. Enter Rockpoint Gas Storage - a YieldCo with “predictable and growing EBITDA”.
In our view, RGSI is a cyclical wolf dressed up as stable YieldCo.
We show:
A cracking backlog where the dollar volume of sales is down ~37% y/y.
15-years of pre-IPO financials that show a volatile, commodity-drive financial model
Brookfield is cashing-out as fast as possible and has even pawned the remaining shares they cannot yet sell
A 79M share overhang.
The full report is here:
DISCLAIMER
This report represents the opinions of Keith Dalrymple and Dalrymple Finance on Rockpoint Gas Storage, Inc. It is an opinion piece, reflects our biases and should not be taken as investment advice of any kind. This is not an offer to sell or a solicitation of an offer to buy any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.
According to Simply Wall Street 12 sell-side analysts cover RGSI. Sell-side analysts are licensed professionals. They likely have significantly more resources than Dalrymple Finance. They also likely have access to management. We strongly encourage those seeking investment advice to consult one or more of the sell-side research professionals covering the stock.
The report is based on publicly available information and due diligence Dalrymple Finance believes to be accurate and reliable. However, it is presented “as is” without warranty of any kind, whether express or Dalrymple Finance makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. This report contains a large measure of analysis and opinion. It is subject to change without notice.
Modified Andrew Left disclosure. We are investors with the goal of profiting from our research. You should assume that as of the publication date, that Dalrymple Finance, Keith Dalrymple and/or affiliates have a position in the securities mentioned in this report. We and affiliates have a vested financial interest in securities discussed in this report. We and affiliates may cover some, all or none of positions following publication. Dalrymple Finance has no control over affiliate trading.
In no event shall Dalrymple Finance or Keith Dalrymple be liable for any claims, losses costs or damages of any kind, including direct, indirect and otherwise, arising out of or in any way connected with information in this report.
although i have long disagreed with your view on brookfield, i applaud every genuine critic on the short side.
you never know when you may face persecution by impinging on gop-backed economic interests.