Dry bulk stocks have dropped significantly over the past several years due to many reasons including weak global macroeconomic conditions, an oversupply of vessels, and limited vessel financing. Many companies have suffered, including industry leader DryShips (NASDAQ:DRYS), while some others even have found themselves in serious financial distress. Unfortunately, this sentiment has carried over to companies that find themselves in better financial positions. Globus Maritime (NASDAQ:GLBS) is one of those companies.
The thesis for GLBS is straight forward. At today's prices, liquidating the company would bring a tremendous return to shareholders based on current asset prices. In other words, at today's prices, the market expects vessel asset prices to continue to drop. If voyage rates stabilize and begin to increase, the stock may become a multi bagger. The risk in the thesis is that charter rates and asset prices continue their descent lower before the market realizes the value in the stock.
Globus Maritime began trading on the Nasdaq in 2010 after spending a number of years being listed in the UK. The company owns 4 supramax vessels, 2 panamax vessels, and one kamsarmax vessel. The market value of the vessels is about $160 million, according to my estimates based on a recent report by ship broker RS Platou. Combining that with current assets of about $16 million and taking out liabilities of $115 million leads to a net asset value (NYSE:NAV) of the company of about $60 million. The company has 10.1 million shares outstanding, which leads to a per share NAV for GLBS of about $6 a share versus a current price of the shares of $3 for upside of about 100% in the stock. This calculation does not take into account any value from Globus' above market charters.
The company had $109.5 million in debt at the end of Q1. However, all of the vessels are owned by subsidiaries and only about half of the debt is secured by Globus Maritime. The rest of the debt is just secured by the vessels. GLBS has no significant debt maturities due until 2014 when it is due to repay $40.4 million in debt.
There seems to be stabilization taking place in vessel prices. In its May report, RS Platou reported that prices for the four different vessels were flat or slightly up for vessels of all ages except brand new Supramax. For 5-year old vessels, the average Baltic panel assessment rose for Capesize and Panamax vessels and fell slightly for Supramax vessels. The Baltic panel assessment is published by the same company that runs the Baltic Dry Index.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.