Nordic American Tanker: An Intriguing Play

I enjoy the straight forward approach that Nordic American Tanker (NAT) and their CEO, Herbjørn Hansson take to their business. Mr. Hansson will issue a letter letting us all know the state of their business well before the official earnings report comes out. He has just released this letter with good news concerning first quarter results and the dividend.

The letter states that spot rates for their tankers have been good and the first quarter dividend will be over $1.00. This will be a nice change from the last two dividends of 40¢ and 50¢. Official earnings and dividend declaration will be in early May.

Nordic American does not try to do anything fancy with their business, stock or dividends. Their fleet of tankers is managed to have very low overhead, they lease only in the spot market and the majority of earnings are paid out as dividends each quarter. The tanker fleet has grown over the last several years and they should continue to add new ships. The dividend can fluctuate tremendously with spot tanker rates. Mr. Hansson believes the spot market will give the best returns over time and that is where the company places 100% of their efforts.

Investors and money managers looking for steady results should stay away, but I find the company very intriguing and an investor with a longer term investment horizon can definitely pick up discounted shares when the dividend is low and reap the rewards when spot rates pick up.

A few months ago, I found this video from CNBC very entertaining. If you know anything about NAT it is filled with errors.

Note: I currently do not have a position in NAT.

Comments

[notsosmart]

i had this co. &fro for a long time. did very well. a lucky pick.

[theplaintiff]

i wonder if this person was the owner of these tankers, or just happen to be made proxy for the feds and us treasury in a request by the
llc out of delware to purchase new super tankers for himself and this company was made a advocate for this llc by bernake and paulson.
it is stil legal, but bears some scrunity. I do believe that the llc out of delware issued a request for 1- 2 trillion in investment on new tankers, and a average of 100 to 2oo billion a peice for a series of airlines with the demand they get new planes that are fule efffient.
he als invested 12 trillion into ford, gmc and chrylser alone.
i also heard he invested trillion in stell mills open and closed to upgrade, rebuild to modern standards, across the country, and put the american worker back to work.
the llc is also geared to get america energy dependant in record time. the llc also made it a major investment in health care and education, social security, medicard, and medicare with almost 100 trillion given as a gift in one year alone to offset taxes.
check with us senator leahy if you think this is a lie, just remind the defendant, that to not tell the truth and fib s a violation of that federal out of court asettlement subject to a 1o times the last agrreed to amount automatically and no appeals allowed.

[ajstocks]

I've been in and out of NAT for the past few of years. It is a great dividend company especially if you are in it for the long haul as Tim Plaehn has suggested. I first bought at a high point, but dollar cost averaged on the downside and made a great dividend along the way as well as a good profit. I currently have a long position in this company and picked up more at $26.50. The next 3-6 months look very good for the dividend and the stock price. If you can stomach the volatility in the spot market tanker rates and hold over the longer term you will be well rewarded.