NEXT

NextDecade ($NEXT) Management Makes $4M 'Contrarian Bet' Despite 40% Stock Plunge

09/26/2025 00:08

NextDecade Corp ($NEXT) is capturing investor attention with a wave of insider buying in mid-September. This Texas-based LNG exporter with a market cap of approximately $1.8 billion has become a talking point due to concentrated stock purchases by management and major shareholders. The company is developing the Rio Grande LNG project in Brownsville, Texas, targeting total LNG production capacity of 17.6 million tons. Currently, Trains 1-3 are under construction, and the company completed a final investment decision on Train 4 in September. This $18.4 billion project is expected to become one of America's major LNG export hubs. The most notable move came from CEO Matthew Schatzman, who purchased 281,500 shares on September 12 at an average price of $7.14, investing approximately $2.01 million. This represents a significant bet demonstrating his confidence. Schatzman, one of NextDecade's founding members, has led the company since 2010 and brings over 15 years of LNG industry experience. This was followed by a cascade of director purchases. William Vrattos purchased a total of 600,000 shares across September 12 and 17, while Bardin Hill Investment Partners bought 357,021 shares at $6.98 per share on September 16. Edward Scoggins Jr also purchased 15,000 shares on September 18, reflecting broad management confidence. Particularly noteworthy is Hanwha Aerospace's substantial buying. Over September 23-24, they purchased 1,001,329 shares totaling approximately $7.01 million. Hanwha Group, already a major strategic partner with significant existing ownership, made these additional purchases despite their substantial current position. Interestingly, this insider buying coincided precisely with declining share prices. NextDecade's stock peaked near $12 in mid-July before falling over 40% to the $6-7 range by mid-September. Morgan Stanley's September 12 downgrade to Equal-weight and price target cut from $15 to $10 added to the stock's pressure. Morgan Stanley cited disappointing financial outlook following Train 4's final investment decision and high financing costs. They specifically noted concerns about expected annual cash flow of only $1 billion from all five trains and downward revision of Train 4 and 5 sales agreement rates to $2.54 per MMBtu. However, concentrated insider buying suggests a different perspective than market concerns. Management appears to believe current share prices don't properly reflect the company's intrinsic value. Indeed, NextDecade has strengthened its business foundation this year through consecutive 20-year LNG supply agreements with global energy companies including Saudi Aramco, TotalEnergies, and JERA. Particularly significant, the company secured $1.8 billion in equity commitments from TotalEnergies and Global Infrastructure Partners for Train 4 in August. TotalEnergies invested $300 million for a 10% stake, while GIP committed up to $1.5 billion for a 50% interest. This substantially addresses market concerns about project financing. LNG market outlook remains positive. U.S. LNG export capacity is projected to triple by 2030, with continued demand growth from Europe and Asia. The EU recently agreed to $750 billion in strategic energy purchases from the U.S., providing significant tailwinds for American LNG exporters. Key positive signals investors should watch include the scale and timing of insider buying. The CEO's $2+ million bet and Hanwha's additional investment represent more than financial investment—they demonstrate business confidence. Additionally, FERC staff's July recommendation for final environmental approval of the Rio Grande LNG project significantly reduces project risk. Conversely, warning signs remain valid. Morgan Stanley's cash flow concerns persist, and potential LNG market oversupply and construction cost pressures cannot be ignored. U.S. LNG project construction costs have risen up to 20% since 2021, potentially pressuring profitability. In an optimistic scenario, smooth construction progress on Trains 1-3 with first production starting in 2027 could improve profitability. Long-term supply contracts provide stable cash flows, and rising LNG prices could offer substantial upside from current levels. The most likely base case involves gradual share price recovery as the project proceeds as planned. Risk scenarios include construction delays, cost overruns, or dramatic LNG market changes. If Train 4 or 5 final investment decisions are postponed or major customer contracts are cancelled, further declines from current levels would be inevitable. Overall, NextDecade's insider buying reflects management's belief that current share prices have fallen excessively relative to fundamentals. Considering structural LNG market growth and the company's project progress, current price levels appear attractive from a medium to long-term perspective. However, near-term monitoring of construction progress, financing developments, and LNG market changes remains essential.