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  • Euronav Could Benefit From The Return Of The Oil Contango [View article]
    Check Euronav's SEC registration statements at for extensive reporting of 9M 2014 and previous years in accordance with U.S. requirements and more. Presumably they will update them immediately after Q4 announcement in February and continue to pursue the listing.

    As the author notes, breakeven numbers include a very heavy depreciation load (as Euronav has a unique depreciation schedule 20 years with zero residual value). I must say that the U.S. public simply doesn't care about depreciation and Euronav's numbers will suffer compared to the publicists at say NAT or the Navios entities (DHT sobered up some time ago and uses 20 years to scrap value).

    To the Investment Doctor - as the comment above says, you may be double counting the effect of lower bunker prices: use of Time Charter Equivalents is a matter of convenience, lower bunker prices simply increase the TCE, as indeed they decrease the voyage costs (spot voyages are paid lump sum on the basis of Worldscale rates). On the other hand, Euronav will indeed save some $10m in opex compared to last year due to the USDEUR rate.

    But yes, I also look forward to all cylinders firing, a U.S. listing and hopefully another 40% - keep up the good work!
    Jan 14, 2015. 04:13 PM | 1 Like Like |Link to Comment
  • Farstad Shipping - My Pick In The Offshore Sector Carnage [View instapost]
    Well, it is only fair to comment on bad picks, rather than let them discreetly go into that good night.

    Oil continued falling, offshore budgets are cut, shareholders exit in an illiquid market and Farstad ended up below NOK40. Book and market values for its assets are meaningless if the assets can't find work. They are in a better position that most, if not all, Norwegian OSV owners, with relatively limited newbuilding exposure and again, relatively OK gearing ratios. Unfortunately, one doesn't make any profits from investing in the safest in a sector that sucks. Is it still my pick in the carnage? Probably yes.
    Dec 20, 2014. 05:58 AM | Likes Like |Link to Comment
  • The NYFEX Report: The IPO Of Navios Maritime Midstream Partners [View article]
    Will be nice to read your articles. Floating NAP at whatever price was a triumph for NNA which despite the fanfare was (and probably still is) going nowhere, crippled with huge finance costs and a bloated share count. They will trumpet the deal tomorrow.

    It just shows that the U.S. markets will even accept an MLP owning widgets, as long as you declare that the widgets will be subject to backstopped service contacts with guaranteed revenue. People like them, banks too, so why not.
    Nov 19, 2014. 05:01 PM | 1 Like Like |Link to Comment
  • The Case For Navios Maritime Partners' Stock Buybacks [View article]
    Author, you base your adapted "intrinsic value" calculation on a theory one should disregard EPS in favour of "operating surplus" (a fabricated metric only MLPs use) because EPS includes "tax" depreciation. Someone tells you that this is illogical since there is no tax depreciation but GAAP depreciation (and in fact at 25-years straight line what NMM uses is quite lower than real economic depreciation) and tries to make the point that it is even more absurd as NMM operations do not pay any taxes in the first place. Instead of reconsidering you say it's not important anymore, and want to use discounted cashflows. Just try it then using current and projected cashflows (and scrap the vessels at the end).

    Intrinsic value and MLP-type financing vehicles are incompatible concepts in my view.

    As to NMM itself, it barely covers its distribution, parent NM is currently forced to subsidize the charters when they roll off in order to keep the show running and perhaps people are catching up to those facts. But this is besides the point.
    Nov 19, 2014. 04:52 PM | Likes Like |Link to Comment
  • Frontline Ltd.: Investors Need To Prepare Now For Bankruptcy [View article]
    To clarify, some of ITCL's subsidiaries (Windsor) are in Ch11, with a $5m loss to Frontline, some others (CalPetro) are in negotiations to liquidate with zero equity to FRO as best case scenario, and the remaining ones (Golden State) are done for after the sale of the Ulriken, with another $13m loss. Total, a minimum $20-25m hit to Frontline's Q3 right out of the block, adding to the current $60m equity hole. This is before operation and possible further impairment losses, as the leased-in fleet ages badly.

    Why would anyone buy hoping that a restructuring would attribute value to current shareholders? What IS that value knowing that the only purpose of continued listing is to access the market via the ATM and further support SFL?
    Aug 31, 2014. 07:33 AM | 1 Like Like |Link to Comment
  • Euronav - An Earth-Moving Acquisition, But Is The Company Still Cheap? [View article]
    Doctor, pricing 10 million shares at EUR8.70, which is basically current book value (not even NAV) doesn't look bad.

    The only Japanese VLCCs that I can immediately associate with Euronav are the remaining Maersk bareboat-chartered H-class. The company has starting using U.S. language in documents and releases, selling itself much better (what a change from the awkwardly direct press releases of the past!) and I think that the Q2 loss will not hit the share price, especially if rates continue to stabilize. With a spike before winter hopefully everyone can cash out with a U.S listing (and pay off the usurious bond).
    Jul 9, 2014. 10:52 AM | Likes Like |Link to Comment
  • Some Thoughts on Euronav [View instapost]
    A Seeking Alpha PRO (!) article on Euronav by The Investment Doctor, fills in the blanks since January on this instablog.
    Jun 30, 2014. 01:17 PM | Likes Like |Link to Comment
  • Euronav - An Earth-Moving Acquisition, But Is The Company Still Cheap? [View article]
    I think this is a great and balanced article on Euronav and it reflects many of my own thoughts almost to the point, including the "ugly" part. A couple of small corrections:

    - the Olympia and Antarctica sale did not reflect current VLCC pricing. Their conditional sale had been fixed almost a couple of years ago as Total knows the vessels and had them already designated for the Kaombo project. Total had already made a downpayment, which would have been lost if they had backed away.
    - only $25m of 2015 convertibles remain (probably will be paid down).
    - I don't think a 5% share of the VLCC market makes any difference - Euronav is pleading with everyone to contribute their vessels in the Tankers International pool, and a 15-20% market share pool does start to make a difference.

    On the ugly part, I don't mind that much the EUR6.7 pricing - actually the share price had moved much too fast and the pricing reflects a small discount to what you think is a fair price this summer (below EUR 8). But the bond was really really bad - and perhaps you can add that all 1,750,000 million shares bought back ages ago are now backing options to management at EUR5.7 exercise price.

    There may be a buying opportunity in late July and afterwards, after Q2. But Euronav will go to the NYSE, align its depreciation policy to its competitors, present much better numbers, highlight the cashflows and U.S. investors will finally buy in.
    Jun 30, 2014. 01:12 PM | Likes Like |Link to Comment
  • Boardwalk Pipeline Partners, The MLP/Full Payout Model, And A Small Investing Experiment [View instapost]
    My BWP experiment has gone more than OK proving that MLPs can bite the bullet, scrap issuing capital only to give it back, and rebuild. At the same time, NMM is again flirting with a share price so absurdly above its earnings or equity that proves that the MLP model is very resistant.

    NMM may try to issue again just because they can, but another shipping synthetic MLP that should do a secondary before announcing Q2 seems to be CPLP. They need a new and very big "accretive" deal as not only earnings will be close to zero for the year, even the cash distribution is at risk of not being covered. I saw no reason in the recent share run-up other than to prime the share price.
    Jun 27, 2014. 05:10 PM | Likes Like |Link to Comment
  • Depreciation Policies Part III: The U.S.-listed Containership Universe And Why Maersk Is Different [View instapost]
    Just as the market was pushing Maersk's excellent Q1 results ( to almost all-time highs, the news that China blocked the P3 shipping alliance dropped the stock yesterday over 6% -

    P3 had already been approved by the US and EU authorities, and perhaps the market had priced the related cost savings in the recent run-up.

    Maersk doesn't need P3 to reach a steady, high group profitability of >$5B annually. The liner business is already highly profitable while most competitors are struggling with low freight rates in an oversupplied market. The big investments in oil and gas and the drilling business are paid by internally generated cashflows, and after a slow 2014 will return high profits. But also the spread for the Maersk bonds is ridiculously low - a new issue is coming up which will be close to free cash. The firepower for any type of investment in any downturn is enormous.

    I had to buy the dip yesterday, even if it was not at the day lows. See you after Q2.
    Jun 18, 2014. 06:48 PM | Likes Like |Link to Comment
  • Overseas Shipholding Group Inc.: A Guaranteed Zero For Equity Holders [View article]
    Anyone can be wrong. All of us have been wrong at times. But this guy was quite arrogant. I guess it's a lesson for all.
    Jun 2, 2014. 04:32 PM | Likes Like |Link to Comment
  • Navios Maritime Holdings' (NM) CEO Angeliki Frangou on Q1 2014 Results - Earnings Call Transcript [View article]
    Smoke and mirrors. A joint venture is unwound and suddenly four 2007 Panamaxes to be delivered in 2015 (as per 20-F) disappear and become a capesize at "bargain" value with no other comment. Magical unrealized "economic benefits" are sold to the gullible public while the 20-F mentions an unrecognized vessel carrying/market value shortfall of $450 million. The company is losing money but showing net income due to the arcane accounting treatment of NMM selling shares at way above its NAV. Short but quite risky, coupled with long SB.
    May 22, 2014. 12:55 PM | 1 Like Like |Link to Comment
  • ACE Still The Place For Reasonable Insurance Returns [View article]
    Even as a prolific author, I don't know if you ever have articles without comments. ACE doesn't seem to attract any retail interest. But if you want one insurer in your LT portfolio, this is the stock to own. And Evan Greenberg is refreshing to listen to in the CCs.
    May 8, 2014. 04:34 PM | Likes Like |Link to Comment
  • Teekay Tankers: An Explosive Growth Story That Is Set To Sail [View article]
    Hey, can I still post in this? As you see, TIL IS buying from TNK: the defaulted VLCCs at premium market prices in a falling crude market This confirms that there's a new fish in the game, TIL. TNK is running off the book, with a little help from its friends. This is good and I started at $3.30, but still waiting for the TK management business hit before considering it a safe investment.
    May 8, 2014. 04:13 PM | Likes Like |Link to Comment
  • Rowan Companies: Temporary Growth, Not As Cheap As It Seems [View article]
    The article you refer to was certainly ambitious, so your counterpoints are welcome, especially in the current lull in the contract drilling market. One could argue with some of your assumptions but the only section that seems to me quite off-base is the one on the payback period for drilling assets, randomly based on a single year (how about a year with losses?) - and honestly, if you end up with 35 years there are about a zillion other projects people would put their money into before offshore drilling.

    I'm not sure Rowan is the most efficient drilling contractor as far as costs are concerned, it is probably not the best in timing the market, and definitely not the most gung-ho. The depreciation policy is relatively soft and maintainance capex high, perhaps adding a bit too much on PPE and therefore NAV. The income investor market is closed to them and growth investors, as you say, can look elsewhere in the sector. Management makes a comfortable living too.

    I am long though - while I don't subscribe to the growth story I do feel the downside is limited. You project what, $10 p/s income over the next three years and $3 p/s annually afterwards. That's fine with me. I also think your projected maintenance capex from 2015 onwards is on the quite high side, so I'd expect a lot more free cash, especially if they start disposing of older assets. So there you go. Keep up the good work.
    May 1, 2014. 03:05 PM | Likes Like |Link to Comment