I listened to the Seaspan investor conference this morning and came away thinking that, as I have for some time, here is a well run company in a tough sector and tough times. I was surprised to see the stock take a drubbing this morning…now down sixty cents or over 8%. Am I not hearing something?
Good question. I took a look through the earnings press release and I see a couple of items that give one pause. A couple of their customers are going through some financial difficulties. Payments are still being made on the vessels but some restucturing is under way. The other item I see with both SSW and near twin Danaos, DAC, are the big new build order books coming into a container market that is 25% off where it was 18 months ago.
These companies seem well managed and continue to have contracts for all of the new build ships. As an investor, at this point you have to ask yourself if you believe that management can pull the company through the recession in one-piece. If yes, this stock will probably triple in the next couple of years. If no, their debt wll bury them. Owning container ship stocks in this economy is a bet on an economic recovery.
Figuring out stock price movement
I received this note in an email:
Good question. I took a look through the earnings press release and I see a couple of items that give one pause. A couple of their customers are going through some financial difficulties. Payments are still being made on the vessels but some restucturing is under way. The other item I see with both SSW and near twin Danaos, DAC, are the big new build order books coming into a container market that is 25% off where it was 18 months ago.
These companies seem well managed and continue to have contracts for all of the new build ships. As an investor, at this point you have to ask yourself if you believe that management can pull the company through the recession in one-piece. If yes, this stock will probably triple in the next couple of years. If no, their debt wll bury them. Owning container ship stocks in this economy is a bet on an economic recovery.