Summary
- The two-year public operating history adds risk to the investment.
- The long-term debt-to-EBITDA ratio remains below 1.
- This partnership intends to grow relatively rapidly at 15% annually.
- Self-funding organic growth dominates prospects.
- The purchase from Summit Midstream assures positive earnings comparisons for the current fiscal year.
- This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. Start your free trial today »
Anytime a company goes public, the sellers are making a statement that they are receiving a good price for the stock that they are selling to the public. It should be absolutely no surprise that within 18 months of going public, more than 90% of all newly public companies sell at half of the offering price or less. Hess Midstream (HESM) has now been public for two years. The value of the business now appears to be approaching the market value of the publicly traded units. This could be good news for unitholders of this rapidly growing limited partnership.
Structure
Hess Midstream began as a joint venture between Hess (HES) and Global Infrastructure Partners.
Source: Hess Midstream May 2019 Investor Presentation
