Hedgeye CEO Keith McCullough is adding USA Compression Partners (USAC) to the short side of Investing Ideas. Below is a brief note.
Looking for new Energy Shorts to have on against your core Energy (XLE) Asset Allocation in #Quad3 (which is the best Sector Style in the SP500 for December)?
Energy analysts Al Richards and Jesse Root went bearish recently on USA Compression Partners (USAC). Here's a summary excerpt from their Institutional Research notes:
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USA Compression Partners, LP is a ~$4B enterprise value Master Limited Partnership that provides natural gas compression services to midstream and E&P customers. The company has been one of the best performing names in the energy ecosystem for the past 3 years. Despite high and increasing leverage, a deteriorating fundamental backdrop, and overdistributing to its partners, USAC trades at a 2.5x - 3x EV / EBITDA premium to the largest competitor in the space with a healthier balance sheet, Archrock Inc. (AROC), as well as smaller competitors CSI Compressco, LP (CCLP) and Natural Gas Services Group (NGS). |
Short the slow-volume bounce to lower-highs,
KM