Image source: Cheniere Energy.

What: Shares of Cheniere Energy (LNG -0.14%) jumped 19% in February as the company started operational ramp-up of its first LNG train and delivered its first cargo, some notable hedge funds increased their stakes, and it received an upgrade from Goldman Sachs. Similarly, Cheniere's subsidiaries Cheniere Energy Partners (CQP) and Cheniere Energy Partners Holdings (NYSEMKT: CQH) jumped 15% and 17%, respectively, as their fortunes are tied to the same facilities as the parent company.

So what: One thing that you need to keep in mind when looking at any gain from Cheniere Energy's stock is that the the stock is down close to 60% from where it was 18 months ago. After a decline of that size, it takes a lot more than a 19% gain at today's prices to make that back up. 

Investors are a little more enthusiastic because Cheniere is now officially an operating company after years of construction. Earlier this month, it filled and delivered its first cargo of natural gas to Brazil's Petrobras. By May, the company's first liquefaction train should be at full capacity and the second train should soon follow. According to analysts at Goldman Sachs, the completion of Cheniere's Sabine Pass facility will lead to the company generating $4.45 per share in free cash flow. That high amount of cash is the very reason why Goldman decided to upgrade Cheniere's stock.

Finally, the last bit of good news that had investors somewhat encouraged about Cheniere's stock is that one of the company's largest stockholders, Seth Klarman's Baupost Group, increased its position in the company to 15% of total shares outstanding. Klarman's well-known reputation as a value investor with a very long-term time horizon is a pretty good sign that the shares are a good bargain.

Now what: One of the biggest reasons that Cheniere Energy's stock suffered so much during the price decline wasn't that the investment thesis on the company changed, it was more a product of its shares being overvalued. With shares trading at less than half what they were a year and a half ago, the stock does look more appealing. Keep in mind, though, that the value of owning this business won't materialize for several years, and we still need to see how safely and efficiently it can operate its facilities before we can get a true bead on how Cheniere will perform over the long haul.