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Cramer discusses Nordic American Tanker and chats with the CEO. Saves me the time to write up comments, since the covered the major points. NAT has done a great job of increasing the fleet during the downturn and the stock has held up well. Just need some of those $1.00+ quarterly distributions.

Nordic American Tanker results video »

The shipping industry’s $350 billion debt

By Tim | Published: November 13, 2009

Felix Salmon » Blog Archive » The shipping industry’s $350 billion debt | Blogs |.

The blog post linked above from Reuters reporter Felix Salmon discusses the large amount of bank debt collateralized by ships. With the current glut of ship inventory, if a company goes under the amount the bank realizes from the sale of assets may not cover the debt.

For shippers, I think this means the less financially secure will have a tougher time obtaining attractive financing for purchases. It may also lead to a more rapid scrapping of older ships.

Posted in Container, Dry Bulk, Tanker | Leave a comment

Nordic American Tanker to pay record dividend

By Tim | Published: November 9, 2009

Record low that is! Nordic American Tanker NAT will pay a thin dime of a dividend for the 3rd quarter. NAT is a small tanker company with a fleet of suezmax tankers. The company employs their ships on the spot tanker market and pays a quarterly dividend based on what the revenues are for the quarter. Dividends have fluctuated greatly over the 12 years the company has been in business, but the yield has averaged over 10% and someone owning the shares since inception would have earned close to $40 just in distributions.

NAT does not have any debt and has the lowest overhead of any tanker company. Before this 10¢ payout the dividend has fluctuated between 40¢ and $1.88 over the last 5 years. During the current economic and shipping rate crisis Nordic American has been picking up used-late model suezmax tankers at about $50 mil. a pop and has increased the fleet size by about 50%.

I believe NAT is a great long-term investment for those who like to collect nice dividends. I am hoping this dividend slash will cause some share price erosion. I would love to pick up some more shares in the $20 range.

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Navios Maritime Partners boosts dividend

By Tim | Published: November 2, 2009

Navios Maritime Partners L.P. – Investors.

Navios Maritime Partners LP NMM has done something rare these days in the world of shipping stocks: They increased the distribution. The new rate is 40.5¢ per share compared to the previous 40¢ per quarter. In the 3rd quarter the company was able to raise capital and commit to the purchase of 2 additional vessels.

Navios Partners has benefited from being able to skim (in my opinion) some of the best contracts from the mothership Navios Maritime NM and the company came into existence in lat 2007 loaded with high revenue, insured contracts with high quality customers.

Operating cash flow has continued to increase and currently NMM has about 1.6 times coverage on all of their distribution obligations. The dividend seems secure for at least a couple of years. None of the current charters expire until the end of 2010. It will be interesting to see how the company works to renew contracts starting late next year. A scan through the charter rates reveals that none is at a rate that seems excessively high in the current rate environment.

I like NMM with their current distribution yield of 12.5% and high quality revenues. I do have a personal holding in this stock.

Posted in Dry Bulk | Tagged | Leave a comment

Genco Shipping and Trading Limited earnings

By Tim | Published: October 29, 2009

Genco Shipping and Trading Limited – Press Release.

Genco Shipping GNK has released their 3rd quarter results, full report linked above. The company’s results look significantly better than those for Dry Ships earlier this week. Genco reported a net income for the quarter of $1.10 per share. This is compared to $2.00 per share in the 3rd quarter of 2008, before everything fell apart for the shipping industry. The company earned $1.20 in the 2nd quarter of 2008.

Good news:

  • GNK manages to bring an impressive 37% of their $93 million in revenues all the way to the bottom line.
  • Depreciation and amortization work out to another 70¢ per share, giving Genco a nice cushion of free cash flow.
  • There is only one more Capesize vessel on the order book to be delivered in the 4th quarter of 2009.
  • There has been no share dilution over the last year.

Negatives:

  • The company has a significant portion of their contracts expiring in 2010 at what are currently above market rates.
  • Quarter to quarter net income is still decreasing.
  • No dividends being paid.

GNK is attractive trading at about 5 times net income and 3 times free cash flow if those numbers can be stabilized at current levels. The shares have tripled off the 52 week low and are up 30%+ year-to-date. I think Genco is one of the better managed dry bulk companies, but I would be looking for either another share price pull back to the mid-teens or a stabilization of net income and a resumption of the dividend.

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Dry Ships struggles with earnings

By Tim | Published: October 27, 2009

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I will put my thoughts up early today about the Q3 earnings report from Dry Ships DRYS. The poster child for over exuberance in the shipping market, circa 2006 and 2007, does not show much besides staying slightly profitable.

Here are some of the figures that caught my eye:

  • Net income (without the interest rate swaps that continue to hammer earnings in this low rate environment) DRYS earned $74.9 million in the quarter compared to 180 million a year earlier.
  • TCE on the dry bulk vessels averaged $33k per day compared to $64k in 2008.

What makes these numbers even worse is that the vessel list still shows quite a few running on contracts at way above current market rates. The TCE will continue to fall. Even more exciting for share holder, the total number of shares outstanding has increased from 42.7 million to almost 254 million! Way to go management. Earnings fall by ove3r 50% and the share base is diluted by a factor of 5. I do not understand why the share price has only fallen by a third so far this year.

It appears there are still some uninformed shareholders/buyers who think this company can recover to its former glory and hype. I think this company still is in trouble and all of the dilution and debt restructuring may not save it from eventual bankruptcy.

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By Tim | Published: August 25, 2009

Here is how the various Baltic Exchange shipping indices fared for the week ending 14 August.

  • Baltic Dry Index (BDI):  -10.3%
  • Baltic Capesize Index (BCI): -14.4%
  • Baltic Panamax Index (BPI): -6.1%
  • Baltic Supramax Index (BSI): +1.4%
  • Baltic Handysize Index (BHSI): -0.7%

  • Baltic Dirty Tanker (BDTI):  +5.2%
  • Baltic Clean Tanker (BCTI): -4.2%

Here are the results of the corresponding stock indices, courtesy of Capital Link Shipping:

  • CL Dry Bulk Index: -1.5%
  • CL Tanker Index: +0.3%

Drybulk shipping rates continue to slide but related stock prices are holding up OK. These days the BDI seems to have little effect on stock prices. Oil tanker owners are starting to see an uptick in rates, especially for Suezmax tankers.

I apologize for the light posting over the last few weeks. I plan to get back to daily writing for this site.

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Baltic Indices for Last Week

By Tim | Published: August 17, 2009

Here is how the various Baltic Exchange shipping indices fared for the week ending 14 August.

  • Baltic Dry Index (BDI):  -0.7%
  • Baltic Capesize Index (BCI): +5.9%
  • Baltic Panamax Index (BPI): -8.0%
  • Baltic Supramax Index (BSI): -7.1%
  • Baltic Handysize Index (BHSI): -0.4%

  • Baltic Dirty Tanker (BDTI):  +0.6%
  • Baltic Clean Tanker (BCTI): -2.8%

Here are the results of the corresponding stock indices, courtesy of Capital Link Shipping:

  • CL Dry Bulk Index: -1.9%
  • CL Tanker Index: +0.0%

Although the numbers above do not show it, the Baltic Dry Indices managed to halt their 3 week slide over the last 2 days of last week. The dirty tanker index looks like a pool table for the last 3 weeks, holding on at break-even for most tanker owners. The outlook for the U.S. stock market is negative for the start of this week, so we will see if the shipping stocks can buck the trend or present some buying opportunities.

Posted in Dry Bulk, Tanker | Leave a comment

Navios Maritime Partners quarterly earnings

By Tim | Published: August 12, 2009

Navios Maritime Partners L.P. – Investors.

The quarterly earnings press release for Navios Maritime Partners LP NMM is linked above. NMM continues to run a painless operation for the income investor. The company’s business model has all of the vessels leased in at abou $12k per day and leased out at an average of about $26k per day. The current fleet is 100% chartered through the end of 2010 and 80% for 2011. All charter contracts are AA insured. Free cash flow adequately covers the current distribution.

Recent news concerning future fleet growth point toward positive revenue and distribution growth over the next few years. This company is almost a little scary how steady the future appears, but I do not see a downside at this time. The 20/20 rear view mirror makes me wish I had picked up a bunch of this stock when it was trading for under $3.50 a share. Hard to believe 9 months later. I do own a position in NMM.

Posted in Dry Bulk | Tagged | Leave a comment

Baltic Indices for Last Week

By Tim | Published: August 10, 2009

Here is how the various Baltic Exchange shipping indices fared for the week ending 7 August.

  • Baltic Dry Index (BDI):  -17.3%
  • Baltic Capesize Index (BCI): -17.5%
  • Baltic Panamax Index (BPI): -18.3%
  • Baltic Supramax Index (BSI): -11.6%
  • Baltic Handysize Index (BHSI): -6.1%

  • Baltic Dirty Tanker (BDTI):  +0.0%
  • Baltic Clean Tanker (BCTI): -0.7%

Here are the results of the corresponding stock indices, courtesy of Capital Link Shipping:

  • CL Dry Bulk Index: -6.8%
  • CL Tanker Index: +2.7%

It was a tough week for the dry bulk shippers BDI while the rest of the market stayed in positive territory. I have not seen any news that would account for the decrease in the dry bulk indices. Let us see how this week starts out.

Posted in Dry Bulk, Tanker | Leave a comment

Nordic American Tanker declares dividend

By Tim | Published: August 7, 2009

Nordic American Tanker NAT has released its usual cryptic quarterly earnings report. The quarterly dividend will be 50¢ compared to 88¢ in Q1. Average daily charter rate was $26,300 for the quarter. The press release noted the Imarex Tanker index reported an average of $20,500 per day for Suezmax tankers, with a low of $9,500 and a high during the quarter of $38,900. 

Almost a month and a half into the 3rd quarter, the spot tanker market still sucks, so the 3rd quarter will probably look a lot like the 2nd. The stock price has been hanging in above $30. For long term investors, this company is a buy when it drops into the $20’s. I own a personal position in NAT>

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