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  • Global Ship Lease Inc.: Forget The Equity And Buy The Bonds Instead [View article]
    Nice article. I'm not sure GSL will buy charter-free vessels. They will do sale and leaseback deals with CMA CGM at above-market rates. The "accretive" deals will allow them to start and increase a dividend, and go to the market for new equity. Only way out. The bonds have usurious terms (including the annual tender mechanism) so that the initial purchasers can offer them to you already making a profit.

    You should add that the bond's minimum denomination is $200000 and also please let us know on which platform you access them. Retail investors looking at high-yield shipping paper have a choice between a number of recent preferred equity deals:
    Apr 5 05:26 AM | Likes Like |Link to Comment
  • Teekay Tankers: An Explosive Growth Story That Is Set To Sail [View article]
    Thanks for the response. The second part of my comment was partly in jest. But I see you agree that there is nothing explosive in terms of growth. As to their regard to equity, these guys issued shares at multiyear lows in order to pay down their bloated TK-inherited lines instead of cashing in on the mortgages. I expressed my views 2 years ago about where to put your money in the group, commenting on another TNK article: I continue to believe the same thing.
    Feb 27 03:13 PM | Likes Like |Link to Comment
  • Teekay Tankers: An Explosive Growth Story That Is Set To Sail [View article]
    Nice article. My view is that TNK is rather in a run-off than near an explosive growth phase. They have relatively limited liquidity with their revolvers running down and much of the available cash (also if they finally manage to sell the mortgaged vessels, which is not at all certain) will go to TK to overpay for the commercial management business.

    But hey, TNK may be become the new TK now, so quite safe and steady (the decision to stop the stupid distribution policy saved the company), and TIL the new TNK, with a full payout model buying ships from TNK. In a few years TIL will sponsor new entity Teekay International Tankers, or TIT, or even better TIT MLP. With the dropdowns to TIT MLP, TIL will be able to buy the remaining TNK vessels, as well as the commercial management business. And everyone gets a share.
    Feb 27 12:48 PM | 1 Like Like |Link to Comment
  • Navios Maritime Holdings' CEO Discusses Q4 2013 Results - Earnings Call Transcript [View article]
    A whole press release and conference with zero reference to net income. Navios changes metrics almost every single quarter (, but that's a new low.
    Feb 23 12:49 PM | Likes Like |Link to Comment
  • Navios Acquisition: A Quality Company At Close To Net Asset Value [View article]
    Correction: 160 million shares with NM series C and share comp.
    Feb 14 08:23 AM | Likes Like |Link to Comment
  • Navios Acquisition: A Quality Company At Close To Net Asset Value [View article]
    A $35 million loss on the debt exchange: check.

    A $21 million loss on the scrapping of the Navigator: check (with another $15 million coming in Q2 for the Splendor, resulting in another overall loss for the company in 2014)

    A typically weaselly earnings PR and garbled CC, forgetting about the product tankers story: check (quiz: how are potential one-time items treated under NNA-GAAP? if it is on the expense side, it is a one-time item, if it is on the revenue side, of course it isn't)

    An immediate follow-on offering after filing the earnings PR as the cash is not enough to pay for the current newbuildings? Check

    A cheeky 1c dividend increase? Sorry, next time. They tried to stabilize the share price after the earnngs through other means. And as the count reaches now 150 million shares (including NM series C shares and recent equity compensation), either management or the remaining banks balked at the cost of this return of capital.
    Feb 14 04:27 AM | Likes Like |Link to Comment
  • Boardwalk Pipeline Partners, The MLP/Full Payout Model, And A Small Investing Experiment [View instapost]
    Thanks for reading JM. Yes, NMM's fundamentals and share price seem to me to be going to opposite directions. Let alone income, they reached non-coverage of the distribution but the market supports them. I'm always surprised.
    This is in line with the argument that "MLPs have richly rewarded all shareholders if you count total return". Jusqu'ici tout va bien.
    Until the voluntary or involuntary crash. I just want to test a small theory with BWP that these cashflows could stay in the company, and that a value investor could eventually benefit.
    Feb 12 06:02 AM | Likes Like |Link to Comment
  • Navios Acquisition: A Quality Company At Close To Net Asset Value [View article]
    This is not a minor correction. NNA bought the VLCCs post Q3 for $163 million, which is in line with the $319 million in the amount owed identified by the author ($170 at end Q3 on the MRs only). Perhaps there is a bargain element, but these vessels were Chinese owned and operated since their delivery. By valuing them at $270 you just created over $100 million of NAV.
    Andrew should submit a correction, as all the good effort has gone for naught.
    A couple of cents from me: look for a $30 million loss on the debt exchange, a $30 million loss on the scrapping of the Navigator and the Splendor (2014 Q2), rah rah rah on EBIDTA and "clean decks", NM providing financing as "due to affiliated parties", a cheeky 1c dividend increase and another follow-on offering. And you need to add the 6 million or so non-voting shares owned by NM.
    Feb 7 03:04 PM | 2 Likes Like |Link to Comment
  • Scorpio Bulkers Inc. - Like A Bull In A China Shop [View article]
    Excellent article. Folly. But Other People's Money, so who cares.
    Jan 31 06:17 PM | 1 Like Like |Link to Comment
  • ACE Limited Management Discusses Q4 2013 Results - Earnings Call Transcript [View article]
    Another virtuoso performance from Evan Greenberg.
    Jan 29 04:15 PM | Likes Like |Link to Comment
  • How To Add $100m To Your Company's Annual P&L With One Paragraph [View instapost]
    One year plus after the change in depreciation policy, China Shipping Development decides to scrap a bunch of quite small, old, coastal trade bulkers and tankers -

    After writing these old vessels down to their scrap value, around $53m, they take a $70m impairment charge - according to the company, "it is anticipated that the average price for the Company to dispose vessels is approximately US$300/long ton".

    These are the bright guys that increased last year the residual value to $470 per ldt, and the expected life to 25 years.

    Brighter than their investors of course. One wonders about the rest of the fleet.

    Jan 29 04:02 PM | Likes Like |Link to Comment
  • No Significant Counterparty Risk In Danoas Corporation [View article]
    There is nothing better than an author taking comments under consideration. The Danaos 20-F for 2009, which discloses rates for many of the charters, will help you fine-tune your model. You will see that ZIM is a larger counterparty than CSCL (China Shipping) and with a higher percentage than 6% (as OOCL is a subcharterer to ZIM).

    It matters little. You have decided that Hyundai and Hanjin are low-risk counterparties, me not. But thanks for having made the effort to think about it.
    Jan 17 04:59 AM | Likes Like |Link to Comment
  • Danaos Corporation: Asymmetric Risk/Reward With Potential 200% Return [View article]
    I don't believe that ZIM, Hyundai and Hanjin are "leading" liner businesses in the sense that they are either insolvent or close to it.

    As to the useful life, 30 years is what SSW, DCIX, CMRE and GSL use so DAC is not an outlier. With engine technology evolving rapidly I tend to think that useful lives could be shorter. This is even more so for vessel sizes that will be displaced (panamax). Maersk Line uses a 20-year useful life DAC sold a bunch of vessels in 2013, all of them around 20-24 years old and all of them seriously impaired.

    I was looking at DAC the whole time in 2013 but could not take the risk. I don't know why the stock is rallying - perhaps more relaxed waivers? - but it now is at levels I would short. 15,000,000 warrants kick in at USD7.
    Jan 10 08:58 AM | 1 Like Like |Link to Comment
  • Danaos Corporation: Asymmetric Risk/Reward With Potential 200% Return [View article]
    Nice article. One could start picking at your model but the reason I've stayed away from Danaos is that I completely disagree with the following: "The average useful life of a container ship is 27-30 years. Taken this and the company's long standing relationship with its customer's (the world's leading line companies) into account,[...]".

    While all container lines have been facing problems the last years, Danaos is doing business to the worst of them. ZIM has not been paying full charter and hugely ambitious Hyundai and Hanjin are hanging on a rope, even if they are trying to raise cash. CMA CGM is still recovering. Very risky counterparties.
    Jan 9 12:42 PM | Likes Like |Link to Comment
  • Some Thoughts on Euronav [View instapost]
    Hi Hohum, I got a bit carried away there as I don't normally talk about actual trades.

    You will find a detailed report on the financing of the deal at

    The $350m equity raise is about 38m new shares at EUR6.70. Plus $500m bank debt and $235m of higher yield bridge financing, both not arranged yet. On the share count, you need to add the previous restructured debt and financing deals: $125m worth of in-the-money convertibles resulting in some 18.5m new shares (at EUR4.4) and a $150 million preferred equity deal convertible in 24.5m shares at around EUR5.8.

    Added to the current 54m share count, I reckon a possible total 125 million shares - before listing in NYSE. On the other hand, it is also around USD750m of additional equity, or some $1.65b total, if you add it to the current $900m (unimpaired) book equity. So the current market price could be slightly ambitious, especially if the VLCC market cools down over spring/summer. But long term, with the cheapest new fleet in the business, the company can do very very well.

    I take back the comment on the fleet, Maersk has only 15 owned VLCCs, the rest is chartered-in, so it is the same deal all along.
    Jan 7 03:21 PM | 1 Like Like |Link to Comment