Teekay Group (TK) the parent company of Teekay LNG Partners L.P. (TGP) and Teekay Tankers LTD. (TNK) held an investor day conference back on 11/6/2019. Link at:
This blog will focus on slide 31. On this slide TK showed the potential uplift based on TNK and TGP’s stock price. Fast forward to today with markets down close to 30% from the highs. We can expand the range on slide 31 and extrapolate values based on current prices. Here is a partial of slide 31:
TNK had a 8:1 reverse split so the prices shown above need to be multiplied by 8. The chart was based on a TK price of $5.14/share at the time. Here is what the chart would look like after expanding it to the downside and converting the percentages into TK stock prices:
On this day TK closed at $2.44, TNK at $16.8 and TGP at $8.01. This would indicate TK should be trading around $3.70 much higher than actual. That is not to say that TK’s price approximation is correct, and the market is wrong, but it does give some insight on how management see’s the value of the company dependent on the fortunes of the daughter companies.
TK management based their valuation on current ownership of 25.2 million TGP common units, the TGP General partner (excluding IDRs) and 40.3 million and 37.0 million Class A and Class B TNK common shares, respectively.